Canada’s housing market is entering 2025 with cautious optimism. Lower interest rates, changes to mortgage rules, and pent-up buyer demand are expected to drive increased activity. However, high household debt, affordability challenges, and economic uncertainty could dampen gains.
This article will analyze expert forecasts, mortgage trends, new mortgage regulations, and other economic factors to provide a comprehensive outlook on Canada housing market in 2025. Whether you are a homebuyer, seller, or investor, understand where the market is headed and how you can respond.
Canada Housing Market Trends
To better understand the current state of the Canadian housing market, it’s essential to examine key trends and data points, such as average home prices and mortgage rates across the country.
Average Home Prices by Province
According to leading housing associations, after a period of declines in 2023 and early 2024, national home prices are forecast to make moderate gains in 2025.
The current average home prices across Canada’s provinces, according to The Canadian Real Estate Association (CREA) National Price Map, are as follows:
| Province | Average Home Price (Nov 2024) |
|---|---|
| Ontario | $984,959 |
| British Columbia | $984,959 |
| Quebec | $490,166 |
| Alberta | $496,438 |
| Nova Scotia | $402,400 |
| Manitoba | $372,441 |
| Saskatchewan | $304,339 |
| New Brunswick | $254,791 |
| Prince Edward Island | $369,903 |
| Newfoundland and Labrador | $294,899 |
| Canada | $694,411 |
The CREA predicts national average home prices will rise by 4.4% to $713,375 in 2025. Royal LePage forecasts a 6% national aggregate price increase by Q4 2025.
Home Price Appreciation and Affordability
According to the Royal LePage Market Survey Forecast, home prices are projected to rise in all major markets across Canada in 2025. Still, the rate of appreciation will vary considerably by region.
| Region | Projected Home Price Appreciation (2025) |
|---|---|
| Quebec City | 11.0% |
| Edmonton | 9.0% |
| Regina | 9.0% |
| Greater Montreal Area | 6.5% |
| Greater Toronto Area | 5.0% |
| Greater Vancouver | 4.0% |
Most and Least Affordable Housing Markets in Canada
As of October 2024, the most affordable housing markets in Canada (based on MLS Home Price Index benchmark prices) include:
| Market | Benchmark Price (Oct 2024) |
|---|---|
| Sault Ste Marie, ON | $297,700 |
| Regina, SK | $321,000 |
| Saint John, NB | $337,600 |
On the other hand, the least affordable markets are:
| Market | Benchmark Price (Oct 2024) |
|---|---|
| Oakville-Milton, ON | $1,219,600 |
| Greater Vancouver, BC | $1,172,200 |
| Lower Mainland, BC | $1,103,600 |
Buyers seeking better affordability may want to explore markets outside the major urban centers, particularly in provinces like Saskatchewan, New Brunswick, and Quebec, where home prices are generally lower and appreciation potential remains strong.
Mortgage Rates Cut Impact
Mortgage rates play a crucial role in shaping housing affordability and demand. As of December 2024, the average mortgage rates in Canada were:
| Mortgage Type | Average Rate |
|---|---|
| 1-Year Fixed | 5.74% |
| 2-Year Fixed | 4.89% |
| 3-Year Fixed | 4.19% |
| 4-Year Fixed | 4.19% |
| 5-Year Fixed | 4.09% |
| 5-Year Variable | 4.35% |
These rates will decline throughout 2025 as the Bank of Canada cuts the overnight rate to support the economy. Lower mortgage rates could improve affordability and spur demand, particularly in more affordable markets.
Impact on Affordability
According to industry experts, variable mortgage rates are expected to drift lower as the Bank of Canada cuts the overnight rate. If the central bank settles at the mid-point of the neutral rate (estimated to be around 2.75%), the lowest variable rates could dip to approximately 3.8% by the end of 2025.
These lower rates could significantly improve affordability for homebuyers, particularly those in less expensive markets outside of Ontario and British Columbia. However, other factors, such as high levels of non-mortgage debt and the rising cost of living, may continue to pose challenges for prospective buyers.
Impact on Home Prices and Buyer Demand
As interest rates decline and affordability improves, buyer demand will increase in 2025. This surge in demand could lead to a more competitive market, with multiple offers and bidding wars becoming more common in sought-after areas.
However, the impact on home prices may vary depending on the region and property type. According to the RE/MAX 2025 Canadian Housing Market Report, 77% of Canadian markets are forecast to be either a seller’s market (44%) or balanced (33%), with only a few markets, such as Hamilton, Ontario, favouring buyers.
The increased demand fueled by lower interest rates could lead to significant price appreciation in major urban centers like Toronto and Vancouver, where housing supply remains limited. On the other hand, in more affordable markets with a better balance between supply and demand, price growth may be more moderate.
Canada’s Provincial Housing Markets
While national trends and projections provide a broad overview of the Canadian housing market, it’s essential to understand the unique dynamics and conditions within each province. This section will briefly explore the housing markets of Canada’s ten provinces, highlighting key statistics, trends, and local market insights.
Ontario
Ontario’s housing market, particularly in the Greater Toronto Area (GTA), has been a focal point of the Canadian real estate landscape. Despite the challenges posed by the pandemic and higher interest rates, the market has shown resilience and is expected to see moderate price growth in 2025.
| Region | Average Home Price (October 2024) | Year-over-Year Change |
|---|---|---|
| GTA | $1,106,050 | +2.2% |
| Ottawa | $786,626 (single-family) | N/A |
| Hamilton | $882,004 (detached) | +5% |
British Columbia
British Columbia’s housing market has experienced significant price appreciation over the past decade. While the market has cooled somewhat in recent years, it remains one of Canada’s most sought-after and expensive regions.
| Region | Average Home Price (October 2024) | Year-over-Year Change |
|---|---|---|
| Greater Vancouver | $1,276,716 | -0.5% |
| Fraser Valley | $911,700 | N/A |
| Victoria | $888,700 | N/A |
Quebec
Quebec’s housing market, particularly in Montreal, has seen steady growth in recent years, driven by strong economic fundamentals and population growth. The province is expected to see continued price appreciation in 2025, outpacing some other major markets in Canada.
| Region | Average Home Price (October 2024) | Year-over-Year Change |
|---|---|---|
| Montreal (CMA) | $642,030 | +11% |
| Quebec City | $419,172 | +11.2% |
Alberta
Alberta’s housing market has faced challenges in recent years due to the oil sector’s downturn and the pandemic’s economic impacts. However, the market has shown signs of recovery, with cities like Calgary and Edmonton experiencing increased activity and price growth.
| Region | Average Home Price (October 2024) | Year-over-Year Change |
|---|---|---|
| Calgary | $615,692 | +14% |
| Edmonton | $436,401 | +15% |
Nova Scotia
Nova Scotia’s housing market, particularly in Halifax, has experienced significant growth in recent years, driven by interprovincial migration and the region’s relative affordability compared to other major cities in Canada.
| Region | Average Home Price (October 2024) | Year-over-Year Change |
|---|---|---|
| Halifax | $576,484 | +9.3% |
Manitoba
Manitoba’s housing market has remained relatively stable, with Winnipeg serving as the province’s main real estate hub. The market is expected to see moderate price growth in 2025, driven by steady demand and a balanced supply of homes.
| Region | Average Home Price (October 2024) | Year-over-Year Change |
|---|---|---|
| Winnipeg | $374,552 | +14% |
Saskatchewan
Saskatchewan’s housing market has faced challenges in recent years, largely due to the downturn in the resource sector and slower economic growth. However, the market has shown signs of stabilization, with cities like Saskatoon and Regina experiencing modest price growth.
| Region | Average Home Price (October 2024) | Year-over-Year Change |
|---|---|---|
| Saskatoon | $394,289 | +11% |
| Regina | $308,094 | +4% |
New Brunswick, Prince Edward Island, and Newfoundland and Labrador
These Atlantic provinces have generally experienced more moderate housing market conditions than larger urban centers in Canada. However, they have seen increased activity and price growth in recent years, driven by interprovincial migration, relative affordability, and the appeal of a more relaxed lifestyle.
| Province | Average Home Price (October 2024) | Year-over-Year Change |
|---|---|---|
| New Brunswick | $315,388 | +12.6% |
| Prince Edward Island | $401,343 | +9.4% |
| Newfoundland and Labrador | $330,683 | +11.4% |
These figures provide a snapshot of the housing market conditions in each province, and local market conditions can vary significantly within provinces and even within cities.
Housing Market for Major Cities
Let’s take a closer look at some of Canada’s major housing markets:
Greater Toronto Area (GTA)
The GTA housing market is expected to see moderate price growth in 2025, with detached homes outperforming condos. The average sold price for detached homes is forecast to increase by 3% year-over-year, while condo prices are projected to decrease by 3%. Semi-detached homes and freehold townhouses are expected to see modest price growth of 1.5% and 1.0%, respectively.
Montreal Metropolitan Area
In Montreal, single-family detached homes and condos will experience strong price growth in 2025. The median sold price for detached homes is projected to increase by 11% year-over-year, while condo prices are forecast to rise by 8%. Plexes (multi-unit properties) are also expected to see healthy price growth of 5%.
Greater Vancouver
The Greater Vancouver housing market will see moderate price appreciation across all property types in 2025. Detached homes are projected to experience a 1.7% year-over-year increase in average sold prices, while townhouses and condos are forecast to see gains of 1.8% and 1.1%, respectively.
Ottawa
Ottawa’s housing market is expected to remain relatively stable in 2025, with modest price growth across all property types. The average sold price for single-family homes is projected to be $786,626, while townhouses and apartments are forecast to see average prices of $582,892 and $422,570, respectively.
Calgary
In Calgary, all property types are expected to experience significant price growth in 2025. Detached homes are projected to see a 9% year-over-year increase in average sold prices, while semi-detached homes and townhouses are forecast to rise by 11% and 15%, respectively. Condo prices are also expected to grow by 12%.
Edmonton
Edmonton’s housing market will see substantial price appreciation across all property types in 2025. Detached homes are projected to experience a 13% year-over-year increase in average sold prices, while semi-detached homes are forecast to rise by 14%. Townhouses and condos are also expected to see healthy price growth of 6% and 16%, respectively.
Winnipeg
In Winnipeg, detached homes are expected to lead the way in price growth, with a projected 7% year-over-year increase in average sold prices. Attached homes (such as townhouses and duplexes) are forecast to grow more than 21%, while condo prices are expected to rise by a more modest 2.3%.
What Changes to Mortgage Lending Rules in 2025?
The year 2025 is set to bring 3 critical changes to mortgage lending rules in Canada. These changes are designed to improve access to homeownership and support the construction of new housing.
Increased Mortgage Insurance Cap to $1.5 Million
Effective December 15, 2024, the mortgage insurance cap will increase from $1 million to $1.5 million. This change will allow buyers with a down payment of less than 20% to purchase homes at a higher price point, particularly in expensive markets like Toronto and Vancouver.
| Home Price | Current Min. Down Payment | New Min. Down Payment |
|---|---|---|
| $1,000,000 | $200,000 (20%) | $75,000 (7.5%) |
| $1,200,000 | $240,000 (20%) | $180,000 (15%) |
| $1,500,000 | $300,000 (20%) | $225,000 (15%) |
30-Year Amortizations for First-Time Buyers and New Construction Properties
Another significant change in 2025 is the expansion of 30-year amortizations to all first-time homebuyers and purchasers of new construction properties. This extension will help reduce monthly mortgage payments, making homeownership more affordable for these groups.
However, a longer amortization period also means paying more interest over the life of the mortgage. Buyers should carefully consider their long-term financial goals and budget when deciding whether a 30-year amortization suits them.
Elimination of Mortgage Stress Test for Uninsured Borrowers Who Switch Lenders
Starting November 21, 2024, uninsured borrowers (those with a down payment of 20% or more) who switch lenders upon renewal will no longer be required to undergo the mortgage stress test, provided the loan amount or amortization period does not change.
This change will make it easier for existing homeowners to shop for more competitive mortgage rates. Lenders may offer more attractive rates to retain and attract new clients.
Overall, these 3 changes will significantly expand borrowing power and accessibility for homebuyers in 2025. However, increased borrowing power does not necessarily equate to increased affordability. Before taking on a larger mortgage, homebuyers must still consider their overall financial situation, including income stability, debt levels, and long-term financial goals.
How Will Slowing Immigration Affect the Housing Market?
The Canadian government has announced that it will reduce permanent resident admissions to 395,000 in 2025, down from the 485,000 newcomers targeted for 2024. The reduction aims to relieve pressure on the housing market and give provinces time to integrate newcomers more smoothly. However, the level remains high historically.
Housing analysts say lower immigration will dampen investment demand, particularly in the rental condo segment, as population growth moderates. However, any impact on prices will take years to materialize. Housing demand from permanent residents occurs with a lag as most immigrants rent first. Any pullback likely awaits 2026 or beyond.
Analysts’ expectations for 2025 home price growth do not account for much of the impact of lower immigration. The effects are longer-term, while Canadian natural population growth and domestic demand will drive the market next year.
Is Canada in a Housing Bubble?
A housing or real estate bubble is a run-up in housing prices fueled by demand, speculation, and exuberant spending (Investopedia). To assess whether Canada is in a housing bubble, it’s important to look at home price trends over time and compare them to other markets.
According to data from the Canadian Real Estate Association (CREA), the average Canadian MLS HPI composite benchmark home price has risen by approximately 201% since 2005. While this may seem like a substantial increase, the prices have not risen in a straight line, with periods of growth and correction over the past two decades.
Compared to other G7 countries, Canadian home prices are among the highest, particularly in major urban centers like Toronto and Vancouver. However, this alone does not necessarily indicate a bubble, as prices can be influenced by various factors such as population growth, economic conditions, and housing supply constraints.
Ultimately, while it’s difficult to predict with certainty whether Canada is in a housing bubble, buyers, sellers, and policymakers need to remain vigilant and prepared for potential challenges and changes in the market.
Advice for Home Buyers and Sellers
Buyers – Take advantage of lower rates/payments but exercise caution when dealing with large mortgages and debt levels. Prioritize affordability. Consider mid-sized cities over Toronto/Vancouver.
Sellers – Higher prices forecast outside expensive metro areas. Consider listing in spring to align with rebounding demand. Price competitively.
Investors – Condo rents may remain weak. Focus on tenant demand projections. Evaluate long-term growth potential beyond 2025.
Key Takeaways on Housing Market Canada 2025
As we navigate the opportunities and challenges of the 2025 housing market and beyond, it will be essential for buyers, sellers, and industry professionals to stay informed, adapt to changing conditions, and make decisions that support their individual needs and the broader health of the housing market and the Canadian economy.
Analysts see a housing market positioned to move off its lows in 2025 but with many wild cards still in play. While the forecast is upbeat, given high debt levels and global uncertainty, nothing is guaranteed.
By staying attuned to the evolving landscape of the Canadian housing market, working with trusted professionals, and maintaining a long-term perspective, Canadians can navigate the challenges and seize the opportunities ahead in 2025 and beyond.
FAQs
Where are the most affordable housing markets in Canada for 2025?
Some of the most affordably-priced major housing markets forecast for 2025 include Regina, Edmonton, Winnipeg, Quebec City, Montréal, Halifax, and Calgary. These areas generally did not see large price surges during the pandemic.
When will mortgage rates bottom out in Canada?
Most economists predict 1-2 more rate cuts in early 2025, which could bring 5-year fixed mortgage rates into the 3% range. This may represent the bottom, after which rates could slowly rise again, assuming economic growth picks up.
Do new mortgage rules make buying a house easier?
Increasing the insured mortgage limit to $1.5 million does help first-time buyers in expensive markets. However, strict qualification rules still apply, so buyers must prove they can handle larger loans. Extended amortizations also improve monthly affordability.
Should I buy or sell a house in Canada in 2025?
Buying a home in 2025 can capitalize on lower rates before prices rise again. But budget carefully based on future rate hikes and income. Selling in early 2025 lets you list before competition from other sellers increases. But price gains won't be rapid.
What is the outlook for real estate investing in Canada in 2025?
Investors may exercise caution in 2025 regarding condo rentals but can capitalize on low rates. Focus on tenant demand projections, not speculation. Single-family rentals remain attractive with solid fundamentals. Evaluate long-term potential over flipping for profits.
Will interest rate cuts boost home sales in Canada?
Yes, lower mortgage rates are expected to drive increased home sales in 2025. Fixed and variable rate reductions since 2024 have already shown this effect in the market. If the Bank of Canada cuts further in early 2025, sales activity could accelerate, especially in spring.