Canadian property price appreciation set for a return to long-term norms in 2025

Royal LePage® predicts declining interest rates and new lending rules will bring buyers back to the market next year

Highlights:

• Royal LePage is forecasting the aggregate price of a home in Canada will increase 6.0% year over year in the fourth quarter of 2025.
• Nationally, single-family detached and condominium prices are forecasted to increase 7.0% and 3.5%, respectively, year over year in Q4 of 2025.
• Greater Montreal Area aggregate home price appreciation (6.5%) expected to outpace greater regions of Toronto (5.0%) and Vancouver (4.0%) next year.
• Quebec City is forecast to see the highest gains among all major regions in 2025, with the aggregate home price expected to rise 11.0%, followed by Edmonton and Regina at 9.0%.

TORONTO, Dec. 5, 2024 /CNW/ - After several years of significant fluctuations, driven by pandemic-era disruptions, dramatic swings in interest rates over a short period of time and economic uncertainty, the Canadian residential real estate market is expected to see price appreciation fall in line with long-term trends in 2025. According to the Royal LePage Market Survey Forecast, the aggregate1 price of a home in Canada is set to increase 6.0 per cent year over year to $856,692 in the fourth quarter of 2025, with the median price of a single-family detached property and condominium projected to increase 7.0 per cent and 3.5 per cent to $900,833 and $605,993, respectively.2

"After several years of unusual volatility in the real estate market, key indicators point to a return to stability in 2025. The backlog of willing and able buyers continues to grow, and upcoming changes to mortgage lending rules will further enhance Canadians' borrowing power," said Phil Soper, president and chief executive officer, Royal LePage. "Most notably, the Bank of Canada's shift from 'inflation fighter' to 'economy booster' has taken time to influence buyer behaviour. We saw a marked increase in market activity at the start of the fourth quarter, following the Bank of Canada's 50-basis-point rate cut. Buyers now believe home prices have hit bottom and are eager to act before competition intensifies."

Home prices are expected to rise next year in all major markets across the country. Quebec City is forecast to see the greatest gains among all major regions, with an expected increase in the aggregate home price of 11.0 per cent year over year in the fourth quarter of 2025. The aggregate price of a home in the Greater Montreal Area is expected to rise 6.5 per cent, while the country's two priciest markets – the Greater Toronto Area and Greater Vancouver – are expected to see more moderate gains of 5.0 per cent and 4.0 per cent, respectively. During the same period, the aggregate price of a home in Edmonton and Regina is expected to rise 9.0 per cent. Meanwhile, Calgary, which saw unprecedented price appreciation and sustained activity over the last two years, is forecast to see home prices increase a moderate 4.0 per cent, along with Ottawa, Halifax and Winnipeg.

Tightening supply to favour sellers, drive price gains

From one region to the next, housing supply levels have contrasted for months; some markets have been reeling from a chronic supply shortage, while others have watched inventory levels steadily climb. As 2025 approaches and buyers become more active, inventory will tighten across the country.

"Over the past several months, supply has been building in the Toronto and Vancouver real estate markets as sellers responded to early interest rate cuts by listing their homes. However, with home prices in these cities remaining high, many sidelined buyers continued to wait for more favourable borrowing conditions. Flat property prices also reduced the urgency often driven by fears of 'missing out,' creating a temporary stalemate where inventory lingered, and buyers hesitated to act. By mid-fall, this dynamic began to shift as buyers re-engaged with the market," said Soper.

"In contrast, markets in Atlantic Canada, the Prairies, and Quebec – where home prices are more modest – have been constrained by low supply and solid demand since the spring market of 2024. Looking ahead, increased buyer activity in these regions is expected to put upward pressure on home prices as more buyers return."

Sidelined buyers are being encouraged back to the market following four consecutive rate cuts by the central bank and the optimism of more to come. The Bank of Canada's overnight lending rate currently sits at 3.75 per cent,3 the lowest it's been in more than two years. The next and final announcement of the year is set for December 11th.

"We expect the boost in buyer activity that began in October will extend to a busier-than-normal winter and a pull-ahead of the spring market," added Soper.

New lending policies to give first-time buyers a leg up

A series of new lending regulations are set to take effect this month, offering greater accessibility to both first-time buyers and current homeowners. As of December 15th, eligibility for 30-year amortizations on insured mortgages will be expanded to all first-time homebuyers and to all purchasers of new construction properties, up from the current 25-year threshold.4 In addition, the mortgage insurance cap will increase from $1 million to $1.5 million, allowing buyers with a down payment of less than 20 per cent the opportunity to explore housing options at a higher price point. This will be especially impactful for homebuyer hopefuls in the country's priciest real estate markets, where average property values often exceed $1 million.

"Improved lending conditions, combined with declining interest rates, will unlock new housing opportunities for many Canadians in the new year. First-time buyers will be the primary beneficiaries of these initiatives, as their ability to borrow more for less with a smaller down payment will help bring them closer to their first home purchase," said Soper. "We believe the return of buyers to the market will encourage builders and trigger a wave of new supply, which is very much needed."

In October, the Office of the Superintendent of Financial Institutions (OSFI) announced that it would eliminate the mortgage stress test requirement for uninsured borrowers who switch lenders upon renewal, provided there is no change to the loan amount or amortization period.5 This change came into effect on November 21st.

"Mortgage holders with upcoming renewals will also feel some relief, knowing that they can explore their options with other lenders without having to requalify under the stress test. And, banks will be encouraged to offer more competitive rates in order to attract new clients and retain current clients," said Soper. "Despite the anxiety some may be feeling about their loans renewing over the coming year, it is worth noting that most would have qualified – thanks to the strict mortgage stress test rules – at a higher rate four or five years ago than the current market rates available today. In other words, the stress test has done its job in keeping the vast majority of Canadians safe from mortgage default."

Soper added, "Addressing Canada's critical housing shortage must remain a top priority for policymakers at every level of government. With our population growing rapidly through both natural increases and immigration, it is essential to stay focused on supporting the development of new homes if we hope to address housing affordability, be it for purchase or rent."

In an effort to achieve well-managed, sustainable growth in the long term, the federal government recently announced a reduction in its immigration targets for 2025 and 2026, down from 500,000 each year to 395,000 and 380,000, respectively.6 This includes a reduction in the number of temporary foreign workers. These reduced targets remain above pre-pandemic levels.7

The changing Canadian landscape

2025 will bring a change in government south of the border, and potentially in Canada's House of Commons. New leadership, in addition to evolving trade relations, immigration policies and global conflict, could meaningfully alter the state of the Canadian housing market.

"With an election approaching in Ottawa and a new administration preparing to take office in Washington, the housing market faces potential disruptions. Here at home, a federal election will see new housing policies that may temporarily impact market activity in the second half of 2025," said Soper. "Meanwhile, south of the border, the incoming Trump administration's trade policies and broader economic agenda have the potential to create ripple effects for Canada's economy and housing market. While these impacts may take time to unfold, they could eventually affect consumer confidence and market dynamics on both sides of the border."

Quarterly forecast

Nationally, home prices are forecast to see the strongest quarterly gains in the first quarter of 2025, with more moderate increases expected in the latter half of the year. The aggregate price of a home in Canada is forecast to be 2.0 per cent higher in Q1 of 2025 compared to the final quarter of 2024, due to strong activity in the spring market. This is followed by expected price gains of 1.5 per cent each in the second and third quarters, heading into the winter months. And, a modest 1.0 per cent increase in the final quarter of 2025.

Royal LePage 2025 Market Survey Forecast Table: rlp.ca/table-2025-forecast

MARKET SUMMARIES

Greater Toronto Area

In the Greater Toronto Area, the aggregate price of a home in the fourth quarter of 2025 is forecast to increase 5.0 per cent year over year to $1,225,770. During the same period, the median price of a single-family detached property is expected to rise 7.0 per cent to $1,523,466, while the median price of a condominium is forecast to decline modestly by 1.0 per cent to $714,285.

"When the Bank of Canada first began making cuts to interest rates midway through the year, sidelined buyers in the GTA seemed resolute in their commitment to hold out for prices to reach their floor. Following the supersized rate cut made in October, the tide began to turn and activity picked up materially. This momentum is expected to persist through the winter months, giving way to an early spring market in 2025," said Shawn Zigelstein, broker and leader of Team Zold, Royal LePage Your Community Realty. "While this boost in activity has not translated into an increase in prices just yet, inventory that had been building up over the past several months is now being quickly absorbed. Another significant batch of supply is unlikely to come online before spring, meaning buyers reentering the market will start to feel competition heat up and see some upward pressure on prices."

Zigelstein noted that detached homes are poised to lead the region in price gains, as most new developments are focused on higher-density projects, leaving this segment perpetually low on supply. However, the condominium segment, which currently has a glut of inventory, is on a different trajectory.

"Toronto's condo market is the softest it's been in recent history, specifically in the downtown core. With interest rates expected to ease further, thousands of new units slated for completion next year, and new lending policies that will ease the burden of monthly carrying costs, this is a rare window of opportunity for first-time buyers," said Zigelstein. "The wave of new condo units set to hit the market will offer a period of better affordability, but it will be short lived. Fewer project starts today mean a period of ultra-low completions several years from now. The eventual return of real estate investors to this segment will result in increased competition down the road."

Royal LePage 2025 Market Survey Forecast Table: rlp.ca/table-2025-forecast

Greater Montreal Area

In the Greater Montreal Area, the aggregate price of a home in the fourth quarter of 2025 is forecast to increase 6.5 per cent year over year to $655,082. During the same period, the median price of a single-family detached property is expected to rise 7.5 per cent to $750,780, while the median price of a condominium is forecast to increase 6.0 per cent to $507,210.

"The Greater Montreal real estate market recorded healthy growth in activity and prices in 2024 after 2023 was characterized by below-average transactions," said Marc Lefrançois, chartered real estate broker at Royal LePage Tendance. "This recovery, spurred by lower interest rates, has materialized in an uneven, regionalized manner. Some areas such as Villeray, Verdun and Longueuil have seen strong demand and rising prices, contrasting with marginal demand in other regions where the housing stock is not as new, and thus, less coveted. The increase in inventory, although limited by neighbourhood, has helped to rebalance supply and demand dynamics, particularly in the luxury segment and for upgraded properties."

Overall, real estate activity bodes well for the coming year in the Greater Montreal Area. According to Lefrançois, economic indicators point to a healthy but measured real estate market in 2025.

Alongside the economic issues that will affect the real estate market in the short- to medium-term, Lefrançois also notes a paradigm shift following the pandemic. After registering an inter-regional migration deficit following the exodus to the regions marked by social distancing and the emergence of remote work, a growing volume of buyers are now making a return to the city. At the same time, with access to property a major hurdle for first-time buyers, some find themselves having to leave the island to find a property within their budget.

"The programs put in place by governments to encourage access to home ownership do offer a helping hand to first-time buyers. However, in the absence of new construction, these initiatives only increase the number of potential buyers without increasing supply, creating upward pressure on prices. In this context, many families have set their sights on more remote areas to become homeowners," recalls Lefrançois.

Royal LePage 2025 Market Survey Forecast Table: rlp.ca/table-2025-forecast

Greater Vancouver

In Greater Vancouver, the aggregate price of a home in the fourth quarter of 2025 is forecast to increase 4.0 per cent year over year to $1,271,712. During the same period, the median price of a single-family detached property is expected to rise 2.0 per cent to $1,766,334, while the median price of a condominium is forecast to increase 4.5 per cent to $795,141.

"After months of stalled activity, sales in Greater Vancouver's housing market began to pick up in October, signaling the turning point of renewed momentum. As borrowing conditions improve, sidelined buyers are reentering the market," said Randy Ryalls, managing broker, Royal LePage Sterling Realty. "There's been a shift in consumer sentiment, with many buyer hopefuls feeling the market has bottomed out. This has brought buyers back to the table and set the stage for an active and early spring market."

Ryalls noted that competition is increasing for most property types. Even those that have been sitting on the market for some time are selling in multiple-offer scenarios.

"Looking ahead to 2025, price gains in the condo and townhome segments are expected to outpace those of single-family detached homes, given the relative affordability of these property types," added Ryalls. "Inventory is already thinning out. I anticipate that demand will outstrip available supply next year, as improved lending conditions draw more and more sidelined buyers back to the market."

Royal LePage 2025 Market Survey Forecast Table: rlp.ca/table-2025-forecast

Ottawa

In Ottawa, the aggregate price of a home in the fourth quarter of 2025 is forecast to increase 4.0 per cent year over year to $803,712. During the same period, the median price of a single-family detached property is expected to rise 5.0 per cent to $935,340, while the median price of condominium is forecast to increase 3.0 per cent to $407,365.

"The Ottawa housing market is on track for an upswing next year. As interest rates have dropped, a steady rise in both activity and prices have materialized, resulting in a better-than-expected fall market. We anticipate that this momentum will continue into the new year," said John Rogan, broker of record, Royal LePage Performance Realty. "We believe Ottawa will see a moderate uptick in home prices as more purchasers enter the ring to take advantage of reduced lending rates next year. We expect that many will be first-time buyers, who have been patiently waiting for mortgage rates to drop to more affordable levels. Steadily-rising rents will also be a motivator for aspiring homeowners to get on the property ladder."

Rogan added that home inventory is expected to replenish at average levels in 2025, though it will not be enough to keep pace with anticipated demand, causing prices to rise. Thanks to the city's robust public sector job market, Ottawa remains a desirable base for newcomers within and outside of the country, a factor that will add to local buyer demand.

"Like many markets, Ottawa should see a robust spring market that kicks off earlier than normal as eager buyers look to transact," said Rogan. "Depending on the timing of the next federal election and the possibility that it could be triggered before October, a softer fall market could be in store. Ottawa buyers and sellers tend to have a stronger reaction when there is a potential changeover in government, seeing as the transition is happening in their backyard."

Royal LePage 2025 Market Survey Forecast Table: rlp.ca/table-2025-forecast

Quebec City

In Quebec City, the aggregate price of a home in the fourth quarter of 2025 is forecast to increase 11.0 per cent year over year to $442,113. During the same period, the median price of a single-family detached property is expected to rise 12.0 per cent to $476,896, while the median price of condominium is forecast to increase 7.0 per cent to $315,222.

"The Quebec City market stands out from the rest of Quebec and Canada, marked by supply that is clearly insufficient to meet demand among all property types. According to our forecasts, this inventory imbalance should continue next year, resulting in a sustained increase in property values," said Michèle Fournier, vice president and real estate broker, Royal LePage Inter-Québec. "However, it's important to note that Quebec City remains one of the most affordable markets in the country, providing access to property for many first-time buyers."

Although figures for the City of Lévis are not included in Royal LePage's statistics, the recently announced moratorium on new construction in that city could have an impact on the real estate market in the greater Quebec City area. By limiting the addition of new properties in Lévis, this decision could increase pressure on neighbouring markets, notably Quebec City, where demand already far exceeds available supply.

"The announcement of the moratorium in Lévis risks creating a domino effect on surrounding real estate markets, exacerbating the imbalance between supply and demand," Fournier explains. "Buyers who can't find properties in Lévis could redirect their search to Quebec City, which would have an impact on prices that are already under pressure in the region."

Royal LePage 2025 Market Survey Forecast Table: rlp.ca/table-2025-forecast

Calgary

In Calgary, the aggregate price of a home in the fourth quarter of 2025 is forecast to increase 4.0 per cent year over year to $728,104. During the same period, the median price of a single-family detached property is expected to rise 4.5 per cent to $836,000, while the median price of a condominium is forecast to increase 2.0 per cent to $278,154.

"The Calgary real estate market was busier than most in 2024, but we've reached a point where conditions appear to be stabilizing. Inventory has risen from extreme lows to levels not seen in nearly two years, although supply remains limited relative to the steady stream of demand. We anticipate that 2025 will bring another robust market. However, it will be more balanced in certain housing styles and price points," said Corinne Lyall, broker and owner, Royal LePage Benchmark. "In the fourth quarter, inventory has increased in the higher-end of the single-family segment, while fewer listings in the lower rungs of the detached market have come online. Looking to next year, we anticipate that this trend will continue – supply will grow in all areas, with the exception of the lower end of the detached market, placing upward price pressure on this category."

Lyall added that much of the price gains Calgary will see in 2025 will be supported by growth in the residential attached and townhome segment, which will attract first-time buyers given these property types' relative affordability and size. The city may also continue to see younger buyers searching in other communities and cities beyond Calgary, where both home and rental prices can be less expensive.

"We have witnessed an improvement in consumer confidence over the last six months, as interest rates have come down. With borrowing costs likely to continue declining through the first half of 2025, we expect this will bring more buyers to the market," said Lyall. "Increased borrowing power will also prompt some sellers to list their homes, allowing them to upgrade their living space and opening up inventory in the entry-level segment."

Royal LePage 2025 Market Survey Forecast Table: rlp.ca/table-2025-forecast

Edmonton

In Edmonton, the aggregate price of a home in the fourth quarter of 2025 is forecast to increase 9.0 per cent year over year to $494,860. During the same period, the median price of a single-family detached property is expected to rise 12.0 per cent to $554,288 while the median price of a condominium is forecast to increase 8.0 per cent to $214,488.

"Compared to our Western Canada counterparts, Edmonton is expecting much more aggressive price appreciation in 2025. As the city continues to hit unprecedented sales volumes, 2024 may be one of the busiest years on record. We anticipate that this momentum will be carried into next year, especially as the local population continues to grow, adding to real estate demand," said Tom Shearer, broker and owner, Royal LePage Noralta Real Estate. "Price appreciation will be driven by a shortage of inventory in 2025. Most homes hitting the shelves are being quickly scooped up, leaving supply significantly diminished. It is unlikely that inventory can be replenished to a healthy level by spring, when the next big wave of demand is expected."

Shearer noted that Edmonton continues to absorb spillover buyer and renter demand from Calgary, further contributing to upward pressure on home prices. Though Calgary has seen rental prices recently decline and the number of apartment completions rise, consumers continue to relocate to Edmonton due to its more affordable real estate market and overall cost of living.

"The Bank of Canada will likely continue to drop its target for the overnight lending rate into the first part of 2025, meaning buyers can expect their borrowing power to expand further," said Shearer. "This will not only allow more purchasers to enter the market, but also encourage move-up buyers to compete in higher price ranges."

Royal LePage 2025 Market Survey Forecast Table: rlp.ca/table-2025-forecast

Halifax

In Halifax, the aggregate price of a home in the fourth quarter of 2025 is forecast to increase 4.0 per cent year over year to $532,064. During the same period, the median price of a single-family detached property is expected to rise 5.0 per cent to $605,745, while the median price of a condominium is forecast to increase 1.0 per cent to $423,291.

"The new year will bring moderate price appreciation to the Halifax housing market. The fourth quarter of 2024 was busier than expected, and we anticipate that this activity will continue into 2025," said Matt Honsberger, broker and owner, Royal LePage Atlantic. "Though the pandemic-era rush to the east coast is now behind us, Nova Scotia continues to attract families from other provinces, particularly those hitting retirement age as well as a small number of Canadians who can work fully remotely. Coupled with international immigration, the population of our city is expected to continue rising, pushing the price of homes up as demand remains consistent. However, this growth may be softened by the increasing number of new construction single-family completions, which will keep supply reserves healthy next year."

Honsberger noted that rental prices in the region continue to trend upward. With borrowing costs continuing to fall, monthly mortgage payments and rental rates are reaching an equilibrium. As a result, tenants are becoming increasingly eager to make the switch from renter to owner.

"Lower interest rates will undoubtedly continue to draw new buyers to the table, as will population growth in the region. This will include many first-time buyers, who will be eager to transact given their expanded borrowing power," said Honsberger. "Potential rate cuts in December and January will help to spur further buyer demand heading into the typically-busy spring market."

Royal LePage 2025 Market Survey Forecast Table: rlp.ca/table-2025-forecast

Winnipeg

In Winnipeg, the aggregate price of a home in the fourth quarter of 2025 is forecast to increase 4.0 per cent year over year to $417,040. During the same period, the median price of a single-family detached property is expected to rise 5.0 per cent to $461,685 while the median price of a condominium is forecast to increase 3.0 per cent to $269,654.

"Those buying or selling a home in Winnipeg next year will benefit from the region's stable housing conditions. Contrary to other major cities in Canada, the highs and lows of this market have historically been far less pronounced," said Michael Froese, broker and manager, Royal LePage Prime Real Estate. "We expect that prices will maintain a steady upward climb in 2025, as inventory remains modestly out of step with buyer demand. If interest rates continue to come down, as they are widely anticipated to do, this will contribute to the gradual uptick in prices. First-time buyers who have been waiting out decades-high lending rates will see their borrowing power expand in the coming months, prompting many to get their foot on the property ladder."

Froese added that immigration continues to drive much of the homebuyer demand in Winnipeg. Newcomers to Canada tend to be drawn to Manitoba's employment opportunities in the skilled trades and natural resource industries, in addition to the lower cost of living compared to neighbouring provinces.

"Falling interest rates will present a windfall not only to entry-level purchasers in 2025, but also those in the move-up and luxury segments of the market," said Froese. "Lower rates mean expanded purchasing capacity for all – those who have been waiting to upgrade their living quarters at a slightly lower rate may feel inclined to make a move next year."

Royal LePage 2025 Market Survey Forecast Table: rlp.ca/table-2025-forecast

Regina

In Regina, the aggregate price of a home in the fourth quarter of 2025 is forecast to increase 9.0 per cent year over year to $423,247. During the same period, the median price of a single-family detached property is expected to rise 10.0 per cent to $468,930, while the median price of a condominium is forecast to increase 5.0 per cent to $232,890.

"Home inventory levels remain at record lows in Regina, and there is no relief in sight in 2025. As has been the story for several months, buying and selling activity in the city has been red-hot, amplified by the lack of supply. Growing job opportunities and the lower cost of living continue to attract many new residents to the city, though newcomers are finding that housing options are limited," said Shaheen Zareh, sales representative, Royal LePage Regina Realty. "It is common to see homes close over asking and multiple-offer scenarios these days. Sales picked up further following the 50-basis point cut that was made in October. We anticipate that demand will continue to intensify following additional decreases to lending rates in 2025."

Zareh noted that investors are selling off condominium units, as they are not seeing adequate returns on their investment, spelling more modest price growth in this segment next year. Residents in Regina are more motivated to own versus rent, especially as monthly mortgage carrying costs remain similar to rental rates.

"Momentum in the market is showing no sign of slowing. We are expecting robust activity levels to continue throughout the winter months and into the spring," said Zareh. "Two more potential interest rate cuts slated for December and January are likely to encourage an early spring market in 2025."

Royal LePage 2025 Market Survey Forecast Table: rlp.ca/table-2025-forecast

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About the Royal LePage Market Survey Forecast

The Royal LePage Market Survey Forecast provides year-over-year and quarter-over-quarter price expectations nationally and for Canada's 10 most prominent real estate markets. Housing values are based on the Royal LePage National House Price Composite, produced quarterly through the use of company data in addition to data and analytics from RPS Real Property Solutions, the trusted source for residential real estate intelligence and analytics in Canada. Additionally, commentary on housing market trends and data on price and forecast values are provided by Royal LePage residential real estate experts, based on their opinions and market knowledge.

About Royal LePage

Serving Canadians since 1913, Royal LePage is the country's leading provider of services to real estate brokerages, with a network of approximately 20,000 real estate professionals in over 670 locations nationwide. Royal LePage is the only Canadian real estate company to have its own charitable foundation, the Royal LePage® Shelter Foundation™, which has been dedicated to supporting women's shelters and domestic violence prevention programs for 25 years. Royal LePage is a Bridgemarq Real Estate Services® Inc. company, a TSX-listed corporation trading under the symbol TSX:BRE. For more information, please visit www.royallepage.ca.

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SOURCE Royal LePage Real Estate Services