NBC: Two-Year Streak: Housing Affordability Improves Through 2025Q4
Highlights:
- Canadian housing affordability posted an eight consecutive improvement in Q4’25. This was the longest streak of improving affordability ever recorded in the country. The mortgage payment on a representative home as a percentage of income (MPPI) fell 0.4 percentage points. Seasonally adjusted home prices rose 0.4% in Q4’25 from Q3’25; the benchmark mortgage rate (5-year term) increased 4 basis points, while median household income rose 0.8%.
- Affordability improved in 6 of the ten markets in Q4. On a sliding scale of markets from best progression to least: Vancouver, Calgary, Toronto, Edmonton, Victoria and Hamilton. On the flip side, Quebec City and Ottawa/Gatineau deteriorated in the fourth quarter, while Montreal and Winnipeg remained unchanged. Countrywide, affordability enhanced by 0.6 pp in the condo portion and 0.4 pp in the non-condo segment.
Housing affordability improved again in the final quarter of 2025, marking an eighth consecutive quarterly gain, the longest streak on record. The mortgage payment as a percentage of income fell to 51.6%, its lowest level in almost four years. Even with the recent improvement, affordability remains well above the long-term average of 40.5% since 2000. The latest progress in affordability came despite a modest increase in national home prices, the first in three quarters. The 5-year mortgage rate reversed the prior quarter’s 4-basis-point increase, declining by the same amount in Q4. This represented the seventh improvement in financing costs in the past eight quarters, offering a slight boost to affordability. With this latest movement, borrowers are financing at rates approximately 22 basis points lower than a year earlier. Income gains, however, contributed more to the improvement in the quarter than changes in interest rates. Although incomes have lagged home price growth in recent years, the gap has been narrowing, and the home-price-to-income ratio now stands at its most favourable level in five years. Affordability trends varied across regions. Vancouver and Calgary posted the largest quarterly declines in the mortgage payment as a percentage of income, helped in part by lower home prices. Toronto also enjoyed a sharp improvement despite the stabilization in home prices. In contrast, affordability worsened in Québec City and Ottawa-Gatineau, where price growth more than offset the impact of higher incomes and lower financing costs. Most of the improvements in the last year have occurred in the markets that were the most stretched, rather than in areas with relatively more affordable housing. This pattern may continue in 2026, as ongoing softness in the Toronto and Vancouver resale markets does not suggest an imminent rebound in prices especially with the ongoing slowdown in population growth. Looking ahead, assuming tepid home price increase changes over the next year at the national level, income growth is expected to remain the primary driver of further improvements in affordability, as interest rates are unlikely to provide much additional support. The Bank of Canada has indicated it is comfortable with its current stance on monetary policy and persistent government deficits worldwide could exert upward pressure on longer-term yields.
www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/housing-affordability.pdf
Will your tax situation be different this year?
| (NC) Each year brings new updates and tweaks to the tax system in Canada. Here are some changes you should be aware of for this year:The lowest income tax rate. Filers will have a lower rate applied to their taxable income, with the lowest marginal individual income tax rate going from 15 to 14 per cent. But the change only took effect halfway through the tax year—as of July 1, 2025. What this means is that the full-year lowest marginal individual income tax rate for 2025 is 14.5 per cent.Top-up tax credit. A new non-refundable tax credit has been introduced to effectively keep a 15 per cent rate for certain non-refundable tax credits. This helps make sure that the people who claim these credits don’t lose out on anything because of the reduction to the lowest individual income tax rate.Northern residents deductions. This change is quite specific, but still important for B.C. residents: The islands of Haida Gwaii have been reclassified to be included in the prescribed northern zone. This lets qualifying residents of the islands claim the maximum value for the northern residents tax deductions.The underused housing tax. This was eliminated as of the 2025 calendar year, and no underused housing tax returns are required for 2025 and later years. If you had any filing and payment obligations from previous years, these are still in effect.By keeping up with the latest changes and staying informed, Canadians can be better prepared to have a smooth time filing their taxes, and to make sure they’re getting all the credits, benefits and deductions they’re eligible for. You can learn more about tax updates at canada.ca/taxes-whats-new.www.newscanada.com |
| Have mortgage questions? I’m here to help you!Please feel free to contact me with any questions you may have. It would be a pleasure to assist you or any one of your friends or family members! |