FINWIRES · TerminalLIVE
FINWIRES

Canada's Housing Affordability Recovery Extends Into Q2 as Home Prices Fall, National Bank Says

By

Canada's housing affordability improved further in the second quarter, as lower home prices more than offset higher mortgage rates, according to National Bank of Canada Capital Markets in a note.

The mortgage payment-to-income ratio fell 1.1 percentage points to 51.1%, marking a tenth consecutive quarterly improvement and the longest streak on record, wrote the bank in Friday's note.

"The drivers of the improvement are changing," wrote National Bank Senior Economist Kyle Dahms.

Mortgage rates rose 7bps in the second quarter and were 9bps higher annually, ending eight consecutive quarters of annual declines. A 2.1% drop in home prices instead improved affordability by 1.1 points, while higher incomes added another 0.4 point, more than offsetting the 0.4-point drag from higher rates, said the economist.

Vancouver and Toronto saw the largest gains as home prices fell, while affordability deteriorated in Quebec City, Winnipeg and Montreal as prices increased.

Since peaking in the last quarter of 2023, the Composite 10 affordability index has improved by 11.4 points to 51.1%, although it remains 10.4 points above its long-run average, added the bank. With interest rates unlikely to provide further relief over the coming year, further gains will increasingly depend on income growth and stable home prices.

Slower population growth should help contain housing demand, while a stronger labor market should support household incomes.

Related Articles

International

New Zealand First Home Buyers Hit Record 28% Market Share in Q2, Says Trade Me

New Zealand first home buyers accounted for a record high market share of more than 28% of property purchases in the second quarter, according to a Monday report by Trade Me Property.The report attributed the surge to several factors, including KiwiSaver withdrawals helping buyers pull together deposits, banks deploying low-deposit lending allowances of up to 25% of owner-occupier loans at less than 20% equity, and Reserve Bank data showing 55% of first home buyer loans in June were approved with less than a 20% deposit.First home buyer momentum is not confined to major cities, with entry-level buyers finding opportunities across the country, the report added.Cotality Chief Property Economist Kelvin Davidson noted that sales volumes have eased somewhat in recent months and listing stock remains elevated, with values edging lower and sitting about 18% below their early 2022 peak, although remaining 16% above where they were before the pandemic.

^NZ50
International

Thailand's GDP Growth Slows to 1.9% in Q2

The Thai economy expanded 1.9% year over year in the second quarter of 2026, slowing from 2.8% in the preceding quarter, according to data released by the National Economic and Social Development Council on Monday.The reading beat the consensus forecast of 1.7% tracked by Trading Economics.On a seasonally adjusted quarter-over-quarter basis, the economy contracted 0.2%, following a 0.6% expansion in the previous three-month period. The consensus forecast was for a 0.6% quarterly drop, according to Trading Economics.

^SET
International

Singapore's Trade Surplus Shrinks in July as Export Growth Eases

Singapore's non-seasonally adjusted merchandise trade surplus shrank to SG$12.6 billion in July from SG$12.9 billion in June, according to data from Statistics Singapore on Monday.Total merchandise exports rose 40.6% year over year to SG$90.3 billion in July, softer than the 48.9% annual increase the previous month.Imports, meanwhile, jumped 36.3% to SG$77.7 billion, also decelerating from the 49.7% growth in June.

^STI