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Affordability continues to deteriorate – CMHC’s latest Housing Market Outlook

April 27, 2023 | By Anthony Capkun

April 27, 2023 – “Affordability will continue to deteriorate through 2023, in both the ownership and rental markets,” declared Bob Dugan, chief economist, Canada Mortgage & Housing Corp., as CMHC published its latest Housing Market Outlook (Spring 2023).

The annual HMO provides overviews and forecasts for Canada overall, as well as 18 major housing markets, through the end of 2025.

Recent Canadian home price declines—from historic highs during the pandemic—are expected to cease in mid-2023, CMHC finds, but the average annual price will end below the 2022 level.

That said, prices will continue to increase from that point through the forecast period.


In fact, price increases—combined with higher mortgage rates and a long-term lack of supply of new housing—will continue to make homeownership less affordable for prospective buyers.

The affordability challenges in homeownership will keep many households in the rental market, which is already facing severe supply shortages, especially in Toronto, Vancouver, and Montreal.

In addition to growth in the number of renter households, this will drive up demand for rental units, tightening rental market conditions and placing significant upward pressure on rents.

According to the HMO, housing starts will decline and remain well below 2021 and 2022 levels, due to higher construction and borrowing costs for housing developers, before seeing some recovery in 2024 and 2025. These levels of housing supply will be insufficient to meet demand growth and will continue to put affordability pressures on Canadian households.

DOWNLOAD the entire Housing Market Outlook (PDF), which also explores 18 major housing markets.

“With inflation coming back to the 2% target by the end of the forecast period, mortgage rates will gradually decline, supporting both housing demand and a recovery in the construction of new housing supply,” Dugan continued. “However, with demand for housing still well outpacing new housing supply, affordability challenges will persist for owners and renters.”


Weaker economic growth and higher mortgage rates continue to slow the economy in 2023. As a result, CMHC expects a price decline between 2022 and 2023, but the average price will not revert to pre-pandemic levels. The agency expects this decline to bottom out sometime in 2023.

CMHC also expects housing starts to decline in 2023 and remain well below recent levels posted in the 2020-2022 period over the forecast period.

Higher mortgage rates and a long-term lack of supply of new housing will make homeownership even less affordable.

Rental market conditions are expected to further tighten, placing significant upward pressure on rents.

The Prairie provinces can expect more positive housing market conditions due to interprovincial migration and affordable homeownership.

Ontario, British Columbia and Quebec will see significant drops in housing starts compared to other regions.

The Atlantic region’s economy remains stable and moderate relative to other regions.

“There are significant risks to our baseline scenario. We’ve therefore developed an alternative scenario that looks at the impact of inflation—and mortgage rates, as a result—remaining higher for longer. In this scenario, there’s additional risk of lower housing prices and starts,” writes Gustavo Durango, senior economist, Market Insights, CMHC.

DOWNLOAD the entire Housing Market Outlook (PDF), which also explores 18 major housing markets.

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