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The Canadian real estate market is showing signs of renewed stability as 2025 begins, offering potential relief for both homebuyers and sellers.
Recent forecasts from Royal LePage, RE/MAX, and the Canadian Real Estate Association (CREA) point to a more optimistic year ahead, with falling interest rates driving a shift in market sentiment.
The Bank of Canada’s interest rate cuts delivered in 2024 -- 175 basis points worth of easing so far -- are already beginning to influence the market, with borrowing costs becoming more manageable for prospective buyers.
"While affordability challenges persist, the sequential interest rate cuts and changes to the mortgage stress test are a much-needed reprieve for those looking to get into the market," said Christopher Alexander, President of RE/MAX Canada.
According to RE/MAX’s 2025 Housing Market Outlook, major urban centres such as Toronto and Vancouver are expected to see significant buyer demand, with annual sales growth forecasted at +20% and +12.5%, respectively.
Home prices to return to steady growth
Royal LePage predicts a 6% increase in national home prices by the end of this year, signalling a return to "long-term norms" after years of market turbulence.
"After several years of unusual volatility in the real estate market, key indicators point to a return to stability in 2025," said Phil Soper, CEO of Royal LePage. "The backlog of willing and able buyers continues to grow, and upcoming changes to mortgage lending rules will further enhance Canadians’ borrowing power.”
Similarly, CREA’s latest forecast projects a rebound in national average selling prices, expecting a 4.4% annual rise, bringing the average price to $713,374.
This marks a significant increase from the modest +0.9% annual growth anticipated for 2024.
The strongest percentage gains this year are expected in New Brunswick (+8%), Quebec (+7%), Alberta (+6.8%) and Nova Scotia (+6%). Meanwhile, price growth in Ontario (+2.4%) and British Columbia (+1.3%) is expected to remain more subdued.
Challenges still lie ahead
While the outlook for 2025 is promising, housing affordability and a lack of inventory continue to pose challenges.
Canada’s housing supply gap remains a significant issue, with recent estimates suggesting the country needs to build anywhere from 3.5 to five million additional homes by 2030 to restore affordability.
That said, 2025 is shaping up to be a better year for real estate overall. Buyers could take advantage of improved rates and more balanced conditions, while sellers might find stronger demand working in their favour.
If you’re thinking about your next step in real estate, staying on top of the market and getting advice from experienced professionals can make all the difference. Let's connect to explore your options and make the most of what 2025 has to offer.
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