Economists warn the window for affordable housing in Canada is closing

By Pamela Heaven

Financial Post

Published Oct 05, 2026

The housing correction Canada has undergone over the past four years hasn’t been great for sellers, but it’s been a boon for buyers. Home prices have fallen around 20 per cent from the nose-bleed territory they reached at their peak after the pandemic, improving affordability. But according to Royal Bank of Canada, that cycle is nearing an end. The only thing improving affordability in the second quarter were rising household incomes, said the report led by assistant chief economist Robert Hogue — and these gains were small.

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CHBA Commentary: This finding is coming sooner for the new housing built for the freehold and condominium ownership. CHBA is working to get government policy makers to understand that the new and existing markets need to be thought of separately. While the price level of Canada’s existing housing stock can fluctuate with changes in interest rates. However, CHBA’s HMI showed and continues to show what happens to new housing starts when buyers are faced with higher interest rates, combined with a mortgage stress test. When lots and units are left unsold, they are not built. It is obvious what this does to future affordability.