Canadian housing affordability improved for a record 10th consecutive quarter in the second quarter of 2026, the longest unbroken run National Bank of Canada has ever recorded. A closer look at what produced that streak shows it is no longer cheaper borrowing doing the work. It is homeowners in Toronto and Vancouver losing money on their properties.
The mortgage payment on a representative Canadian home fell 1.1 percentage points to 51.1 per cent of median household income in the quarter, its lowest reading in roughly four years, according to National Bank’s Housing Affordability Monitor, released Aug. 17.
The decomposition is where the story sits. The benchmark five-year mortgage rate rose seven basis points during the quarter and sat nine basis points above its level a year earlier, worsening the ratio by 0.4 percentage points. Rising household incomes contributed 0.4 points of relief, exactly cancelling the rate drag. That leaves the entire 1.1-point improvement attributable to a single factor: a seasonally adjusted 2.1 per cent decline in home prices.
“This shift from rate-driven to price-driven affordability gains was particularly evident in Vancouver and Toronto, where sizeable price declines generated the largest affordability gains among the markets covered,” National Bank economist Kyle Dahms wrote in the report.
The markets getting cheaper are the ones losing value
National Bank found affordability improved in six of the 10 metropolitan areas it tracks: Vancouver, Toronto, Hamilton, Calgary, Ottawa-Gatineau and Victoria. It deteriorated in four, namely Quebec City, Winnipeg, Montreal and Edmonton, in each case because home prices kept climbing.
Cross-referenced against Royal LePage’s Q2 2026 National House Price Composite, the pattern is close to a clean inversion. Greater Vancouver’s aggregate median price fell 4.5 per cent year over year to $1,164,100 and the Greater Toronto Area fell 4.6 per cent to $1,101,700, the two steepest declines among Canada’s largest markets. Those are the same two markets National Bank credits with the largest affordability gains, with Toronto’s ratio improving 2.5 points and Vancouver’s 2.6 points.
At the other end, Greater Montreal rose 4.9 per cent year over year to $650,500, Quebec City rose 6.1 per cent to $465,800 and Winnipeg rose 3.2 per cent to $429,400. All three appear on National Bank’s list of markets where affordability got worse. Quebec City posted the sharpest deterioration of any market tracked, its ratio rising 1.4 points on a 3.5 per cent quarterly price gain.
Put plainly: in the second quarter of 2026, a Canadian city could deliver equity growth to the people who already owned homes, or improved access for the people who did not. Almost none delivered both.
A record streak that has not restored normal
The length of the improvement also masks how far the market remains from historical norms. The national composite still sits 10.4 percentage points above its average since 2000, and affordability is worse than its long-run norm in all 10 markets National Bank covers. Hamilton, Victoria and Quebec City each remain more than 14 points above their own averages.
Vancouver stays the country’s least affordable market, with the mortgage payment on a representative home consuming 79.4 per cent of median income. Victoria sits at 73.9 per cent, Toronto at 68.3 per cent and Hamilton at 57.5 per cent.
Since the ratio peaked at 62.5 per cent in the fourth quarter of 2023, it has fallen 11.4 points. National Bank attributes 5.1 of those points to lower mortgage rates, 4.2 to rising incomes and 2.1 to falling prices. The bank does not expect mortgage rates to provide further relief over the coming year, a view consistent with the Bank of Canada holding its policy rate at 2.25 per cent on Sept. 2 for a seventh consecutive decision.
Strip the rate contribution out of that 11.4-point decline and the remaining drivers, incomes and prices, account for 6.3 points across 10 quarters, or roughly 0.63 points a quarter. On that pace, and assuming prices do not resume rising, closing the remaining 10.4-point gap to the 2000-onward average would take about 16 more quarters, or roughly four years. That figure is this publication’s arithmetic applied to National Bank’s published decomposition, not a forecast by the bank.
Dahms was more measured. “On balance, we expect income growth to remain an affordability tailwind, but with financing costs no longer helping, further improvement will increasingly require home-price growth to remain contained,” he wrote.
Which is another way of saying the record streak continues only for as long as Canadian homeowners keep absorbing the cost of it.
Sources: National Bank of Canada Housing Affordability Monitor, Q2 2026, as reported by Canadian Mortgage Trends (Aug. 17, 2026); Royal LePage National House Price Composite, Q2 2026, data provided by RPS Real Property Solutions; Bank of Canada interest rate announcement, Sept. 2, 2026.
