Canada’s largest bank is the latest to forecast falling real estate prices next year. Despite sales improving, RBC is forecasting further price declines next year—with the impact amplified in Toronto and Vancouver. The bank warned rising sales won’t be enough to counter rising supply, a lack of affordability and immigration transforming from a tailwind to headwind.
Canadian Real Estate Prices To Fall In 2026
Source: RPS; RBC.
Canadian real estate prices are expected to flatline over the next two years. RBC projects the price of a typical home will rise 0.7% in 2025 before slipping 0.7% in 2026—a small drop on a larger base that will push values to their lowest since 2023.
The bank sees home sales climbing 7.9% in 2026—a substantial increase, but “won’t be enough” to lift prices. Rising inventory, especially in overbuilt markets in BC and Ontario, will keep the downward pressure intact.
Canadian Real Estate Problems Concentrated In BC and Ontario
Most of the drag on the national index will come from BC and Ontario, where excessive supply and fierce seller competition will weigh on prices. This year, the price of a typical home will fall slightly more in Ontario (-1.0%) than BC (-0.8%). In 2026, losses are forecast to deepen in Ontario (-1.4%) but ease in BC (-0.1%).
Toronto and Vancouver are seen as the most vulnerable markets, particularly in the condo segment. While RBC didn’t publish city-level forecasts, the CREA benchmark for Toronto was down 5.4% year-over-year in July.
The rest of Canada is much better balanced. RBC expects home prices will see modest gains in the Prairies, Quebec, and Atlantic Canada.
Canadian Immigration Went From A Tailwind To A Headwind
Source: Statistics Canada; RBC.
There are a few reasons behind the price decline forecast, but immigration is the biggest. The sudden surge in immigration helped to push prices higher, and now the slowdown will help moderate demand. The slowdown will have an amplified impact in Southern Ontario and BC’s Lower Mainland, regions overrepresented when it came to population growth.
Further limiting price growth is the supply overhang, affordability constraints, and a weak job market. Listings are rising faster than sales, especially in urban centres. Affordability is severely stressed, with RBC estimating a median household would need to spend a near-record share of income (59.5%) for a home in July 2025. The job market is also showing mixed results, with the unemployment rate forecast to peak at 7.1% this year.
RBC’s forecast shows little change at the national level, but it’s important to drill down into the data. The resilience demonstrated at the national level is masking regional erosion in provinces like BC and Ontario. A gradual recovery is forecast, but it sees little to no near-term price lift.
The home price forecast seems a little on the optimistic side, given the warning on immigration. Rising immigration was used to justify substantial price growth based on future expectations of demand. However, the absence of growth is only expected to stabilize prices. Funny how that works.