Canada's housing affordability crisis expected to persist despite rate cuts

Despite recent interest rate cuts, Canada’s housing affordability crisis remains a significant challenge for homebuyers. While lower rates typically make borrowing more accessible, experts warn that structural issues in the housing market will continue to drive high costs.

One major factor is the persistent housing supply shortage. The demand for homes in major cities like Toronto and Vancouver far exceeds available inventory, pushing prices higher. Even with reduced mortgage rates, limited housing options mean that affordability will not improve significantly in the short term.

Additionally, population growth, driven by immigration, is increasing housing demand. Canada welcomed over 400,000 new immigrants in 2024, further straining the market. Developers are struggling to keep up due to high construction costs, labor shortages, and regulatory delays.

Another concern is that banks remain cautious about lending. Despite lower interest rates, strict mortgage qualification rules continue to make homeownership difficult for many Canadians, particularly first-time buyers.

Ultimately, while rate cuts may provide some relief, they are not a solution to the underlying affordability crisis. Addressing supply issues through policy changes, increased development, and investment in affordable housing will be essential to ensuring long-term housing stability.