While house prices at the national level remain well below their peak in early 2022, home affordability has diverged across major Canadian cities since the Parliamentary Budget Officer’s (PBO) September 2022 assessment.
The national average house price was $687,300 in August 2025, down from the February 2022 peak of $837,400, according to the multiple listing service house price index (MLS HPI), the PBO’s preferred benchmark.
Over the same period, the Bank of Canada steadily increased its policy interest rate to 5% in mid-2023 and then gradually lowered it, reaching 2.75% this March. The average five-year fixed mortgage lending rate fell from its high of 6.5% in November 2023 to 5.1% in August 2025. Both the decline in house prices and the reduction in interest rates have helped improve affordability in several cities, with the most significant improvements observed in markets where housing had been the most unaffordable in previous years.
Trends in average house prices diverged across different cities from 2015 to 2025. In Hamilton, Ottawa, Toronto, Vancouver and Victoria, average prices followed an increasing trend and rose above affordable prices. Average prices peak in early 2022 before falling slightly but stabilizing above affordable prices.
The affordability gap, or the difference between the average house price and what an average household can afford, dropped the most in Hamilton (from 117% in February 2022 to 52% in August 2025) and Toronto (from 67% to 36%).
Affordability was worse in Calgary, Halifax, Montreal and Quebec, where average prices rose above affordable levels between 2020 and 2022 and remained persistently higher afterwards. The affordability gap rose the most in Quebec (from 1% in February 2022 to 44% in August 2025) and Montreal (from 29% to 58%).
Meanwhile, house prices remained relatively close to affordable levels from 2015 to 2025 in Edmonton and Winnipeg.