Housing affordability in Canada hasn’t recovered from the disruptions of the past five years and is unlikely to materially improve over the next two years, according to a Desjardins housing report published Wednesday.
Following the sharp rise in home prices during the pandemic and the subsequent increase in interest rates, Canadian families were still facing stretched budgets at the beginning of 2025. While prices have moderated in provinces like Ontario and B.C., they’ve reached all-time highs in most other regions, the report said.
But this isn’t solely a pandemic-induced issue, the report notes. Home prices have increased more than fourfold since 2000, while average household disposable income has only doubled.
The growing gap between home prices and incomes means aspiring homeowners need significantly more time to save for a down payment. If a household with an average national income saved 20% of its disposable income in an account earning 3% annually, it would take about six years to save a 20% down payment on an average home priced at $720,000.
However, would-be buyers in some provinces have it tougher. Families in Ontario and B.C. may need more than seven years to save for a down payment, while those in Newfoundland and Labrador or Saskatchewan may only need three.
High rent inflation between 2022 and 2024 also likely challenged prospective buyers’ ability to save. One-third of renters have missed a debt payment, compared to fewer than 5% of homeowners.
As saving for a down payment takes longer, home ownership can feel out of reach for many. Some receive help from family, while others move to more affordable regions. A single-family detached home in Vancouver averaged just over $2 million at the end of 2024, compared with less than $300,000 in Newfoundland and Labrador.
The federal government has launched savings programs for first-time buyers, such as the First Home Savings Account, and plans to eliminate GST on new homes priced up to $1 million. However, the report noted these measures could increase demand and push prices higher. It did not address Prime Minister Mark Carney’s promise to create a federal agency, Build Canada Homes, to increase affordable housing stock and provide up to $25-billion in debt financing for home builders.
While the U.S. trade war with Canada may put downward pressure on interest rates — helping lower mortgage costs — rising unemployment will weigh on household disposable incomes.
Home sales will remain soft in 2025, but Desjardins expects growth to return in 2026.