Canada's Most Expensive Housing Markets Lead Affordability Surge in 2025
A comprehensive new analysis from Ratehub.ca has revealed a surprising trend in Canadian real estate: the nation's most expensive housing markets experienced the most significant improvements in affordability throughout 2025. The study, which examined mortgage qualification requirements based on average home prices across major urban centers, found that cities with traditionally high housing costs led the country in making homeownership more accessible to buyers.
Hamilton Tops Nation with Dramatic Affordability Improvement
Hamilton, Ontario emerged as the clear leader in affordability gains, requiring homebuyers to have $18,610 less annual income at the end of 2025 compared to the beginning of the year. This substantial reduction represents one of the most dramatic shifts in housing accessibility observed in recent Canadian real estate history.
The specific numbers tell a compelling story: in December 2025, buyers in Hamilton needed an annual income of $153,090 to qualify for an average-priced home, compared to $171,700 required in January of the same year. This calculation was based on a standard 10 percent down payment for a five-year fixed mortgage at 4.46 percent interest, down from the 4.7 percent rate available at the start of 2025.
It's important to note that all mortgage calculations still incorporate the federal stress test requirements, which mandate that borrowers must qualify at rates 200 basis points higher than their actual mortgage rate to ensure they can withstand potential interest rate increases.
Price Declines Drive Affordability Gains
The primary driver behind Hamilton's improved affordability appears to be declining home prices rather than interest rate changes. The average home price in Hamilton dropped significantly from $805,400 at the beginning of 2025 to $725,200 by year's end, creating a more accessible market for prospective buyers.
Other Major Markets Follow Similar Pattern
Toronto ranked second in affordability improvements, with annual income requirements dropping by $18,590 from $213,020 to $194,430. Similar to Hamilton, this improvement was fueled by a substantial decline in average home prices, which fell $75,300 from $1,017,600 to $942,300 over the course of the year.
Vancouver secured third place in the Ratehub.ca study, with buyers requiring $15,100 less income to purchase an average-priced home. The required annual income decreased from $242,400 in January to $227,300 in December, supported by a $53,600 decline in average home prices from $1,168,400 to $1,114,800.
Calgary Shows More Modest Improvement
Calgary ranked fourth in the study for improved affordability, though with more modest gains compared to eastern markets. The city saw a $6,030 decline in required annual income, dropping from $126,450 in January to $120,420 in December for an average-priced home of $553,900. This represented a $19,100 decrease from the average price of $573,000 recorded at the beginning of 2025.
The Ratehub.ca study provides valuable insights into shifting housing dynamics across Canada's major urban centers, suggesting that even in traditionally expensive markets, changing economic conditions can create new opportunities for prospective homebuyers. While affordability remains a significant challenge in many Canadian cities, the 2025 data indicates that some of the most pressured markets are showing signs of increased accessibility for qualified buyers.
