Canadian Housing Market Outlook 2025

Toronto skyline under a dramatic cloudy sky, illustrating the evolving landscape of Canada's housing market as experts look ahead to 2025.

As of January 2025, the Canadian housing market is exhibiting signs of recovery, influenced by various economic factors and policy changes.

Market Recovery and Sales Projections:

Interest rate reductions in 2024 have set the housing market on a recovery path, despite some fluctuations. The Canadian Real Estate Association (CREA) forecasts a 4.7% increase in the national average home price, reaching $722,221 in 2025. In 2026, sales are expected to rise by 4.5%, with the average home price projected to grow by 3.3% to $746,379.

Affordability Challenges:

Despite anticipated interest rate cuts, housing affordability remains a significant concern. High home prices, stagnant wages, and increased demand from immigration contribute to this issue. Experts suggest that to restore affordability, house prices would need to decrease by at least 10%, and mortgage rates would need to fall by half.

Reuters

Regional Variations:

The housing market recovery is not uniform across Canada. More affordable markets, such as Calgary and Moncton, have experienced significant price increases, while larger, more expensive markets like Toronto and Vancouver have seen prices stabilize or decline slightly.

Wikipedia

Economic and Policy Influences:

Changes in immigration policy aimed at reducing population growth to alleviate strains on housing and infrastructure may impact economic growth and housing demand. Bank of Canada Governor Tiff Macklem has noted that lower population growth could lead to reduced GDP growth, potentially affecting the housing market.

WSJ

In summary, while the Canadian housing market is on a recovery trajectory with modest price increases projected for 2025 and 2026, challenges related to affordability and regional disparities persist. Economic policies, interest rate adjustments, and immigration trends will continue to play crucial roles in shaping the market's outlook.