As 2025 begins, there is greater optimism around the Canadian real estate market, as many experts forecast a rebound driven by lower borrowing costs, pent-up demand, and a more stable economic environment. The projections vary across sources, but most agree on a renewed upward trend in sales and home prices.
Key Drivers of the 2025 Real Estate Outlook
Lower interest rates are the linchpin of the anticipated recovery. BNN Bloomberg reports that the Bank of Canada’s easing monetary policy has already begun to stimulate the market. Phil Soper, president of Royal LePage, points to the Bank of Canada’s recent rate cuts and their expected stabilization in the latter half of 2025 as pivotal. Soper notes, “When the Bank of Canada reaches neutral rates—neither slowing nor stimulating the economy—investor confidence is likely to surge.”
The Canadian Real Estate Association (CREA) also highlights a combination of factors expected to drive activity, including reduced borrowing costs, pent-up demand, and the traditional surge in spring listings.
General Optimism for Canadian Real Estate Market Improvements
The CREA forecasts an 8.6% increase in home sales through MLS® Systems in 2025, up from their prior estimate of 6.6%. The national average home price is predicted to rise by 4.7% to $722,221. TD Economics offers a more dramatic forecast, projecting a 15.8% increase in home sales and an 8% rise in average prices. Their analysis credits steady economic growth and the gradual reduction in interest rates.
Regional Predictions
The CREA predicts recovery to differ across regions. It forecasts that British Columbia and Ontario, with their substantial inventories, will see stronger sales rebounds. In contrast, Alberta and Saskatchewan, with tight supply and relatively affordable prices, are poised for significant price gains. Atlantic Canada and Quebec are expected to experience balanced increases in both sales and prices.
Royal LePage forecasts aggregate home price growth of 6% nationwide, with the highest gains projected in Quebec City (11%), followed by Edmonton and Regina (9%). The Greater Montreal Area, Toronto, and Vancouver are expected to see more moderate increases of 6.5%, 5%, and 4%, respectively.
ReMax anticipates sales growth in 33 of 37 regions, with some areas potentially experiencing sales increases of up to 25%. They also predict a 5% rise in the national average home price, closely mirroring Royal LePage’s outlook.
Cautions
On the other hand, a Reuters poll presents a more cautious perspective, predicting a modest 2.8% rise in prices due to ongoing affordability challenges.
Affordability remains a critical concern despite optimistic forecasts. Reuters analysts warn that high prices could continue to deter many potential buyers, particularly in markets like Toronto and Vancouver. The CREA also notes potential economic risks tied to evolving trade relations with the United States.
Despite any challenges, many experts seem to agree that 2025 will mark a turning point, with first-time buyers, smaller investors, and institutional players re-entering the market. With new policies and continued population growth driving demand, the Canadian real estate market appears well-positioned for a recovery.
Investor Sentiment and Long-Term Outlook
The enduring appeal of Canadian real estate as a reliable investment is a key factor noted in predictions. Soper emphasizes the historical resilience of home prices, which have shown steady appreciation over time. Improved lending policies, such as expanded eligibility for 30-year amortizations and the removal of stress test requirements for mortgage renewals, are also expected to bolster buyer activity.
Regardless of predictions, many experts recommend investors remember to take a long-term perspective, rather than trying to time the market.
The Canadian real estate market in 2025 is characterized by a certain amount of optimism. While there is consensus on factors impacting recovery, such as lower interest rates and pent-up demand, predictions vary regarding the extent of price and sales growth. Regional variations, affordability challenges, and potential economic risks will shape the market. However, many foresee a more promising year in Canadian real estate.