Bank of Canada warns housing affordability remains a major challenge

Monday 05 - 09:47

By: Azzat Manal

Bank of Canada warns housing affordability remains a major challenge

Canada continues to face significant challenges in housing affordability, with the Bank of Canada warning that high housing costs remain a major economic concern for households across the country.

Senior Deputy Governor Carolyn Rogers said housing affordability remains one of the most pressing issues facing Canadians, affecting both people trying to purchase homes and those renting. She made the remarks on October 1 in Victoria, British Columbia, during a speech to the Greater Victoria Chamber of Commerce and CFA Society Victoria.

Rogers noted that although home prices have declined in some markets, this has not resolved the broader affordability problem. Lower prices can provide some relief to prospective buyers, but they can also affect household wealth, consumer spending and housing construction, creating a complex economic trade-off.

The central bank official stressed that interest rates influence housing demand but cannot, on their own, correct long-term imbalances between supply and demand. She pointed to a range of factors affecting housing costs, including land-use policies, zoning rules, construction costs, population growth, financing conditions and infrastructure.

Rogers argued that increasing the pace of home construction will be essential to improving affordability over time. She also highlighted the need for better planning and investment in infrastructure to support additional housing development.

Housing costs have broader economic consequences because households spending a larger share of their income on rent or mortgage payments have less money available for consumption, savings and unexpected expenses. The Bank of Canada has also linked housing conditions to household wealth, financial stability and overall economic growth.

The central bank's assessment comes as housing activity remains uneven across Canada. Earlier in 2026, the Bank noted that stretched affordability and slower population growth were weighing on housing demand and residential investment, while increased housing supply was helping to ease some market imbalances.

The latest comments underline the limits of monetary policy in addressing a problem that also depends on construction, land-use decisions and infrastructure. Improving affordability, according to the Bank of Canada's assessment, will therefore require measures extending beyond interest-rate policy.