Canada Housing Market

Canada’s housing market is set for a price surge in 2025, with national average home prices predicted to rise by 5%, according to Re/Max Canada’s 2025 Housing Market Outlook Report. Limited inventory and growing demand, fueled by interest rate cuts and improved consumer confidence, are expected to drive the increase.

What’s Driving the Price Increase?

Re/Max Canada highlights several factors contributing to the anticipated rise in prices:

• Interest Rate Cuts: Lower interest rates are making it easier for buyers to enter the market.
• Increased Demand: More Canadians are confident in making housing investments, boosting sales activity.
• Limited Supply: A persistent lack of inventory is creating a competitive market that drives prices upward.

Christopher Alexander, president of Re/Max Canada, noted that while affordability challenges remain, changes to the mortgage stress test and falling interest rates offer some relief for buyers, especially first-time homebuyers.

First-Time Buyers Lead Market Activity

First-time buyers are expected to play a major role in the market, accounting for increased activity in 81% of surveyed regions. This demographic is poised to benefit from improved conditions, including greater flexibility in financing and options for entry-level properties.

Optimism About Homeownership

A Leger survey commissioned by Re/Max reveals that 36% of Canadians believe housing market conditions will improve in 2025. Despite affordability concerns, 73% of Canadians still consider homeownership the best investment they can make.

Other findings include:

• Relocation for Affordability: 40% of Canadians are open to moving to more affordable areas.
• Climate-Resilient Housing: Interest in climate-conscious properties has grown, with 47% prioritizing homes less vulnerable to climate change—a 14% jump from 2024.

Regional Market Insights: Where Prices Are Rising

Re/Max forecasts that nearly half (44%) of Canadian housing markets will shift to favour sellers in 2025. Here’s what to expect across the country:

Western Canada

• Edmonton: Prices are expected to rise by 10%, driven by homebuyers relocating from Calgary for affordability.
• Greater Vancouver Area: A 7% price increase is projected, with sales growth reaching up to 20%.

Ontario

• Toronto: Prices are forecasted to increase slightly, by 0.1%, as the market remains balanced.
• Simcoe County: A significant 10% price increase is expected, reflecting strong demand in smaller urban areas.
• Mississauga and Kitchener-Waterloo: Balanced market conditions are anticipated, with steady demand.

Atlantic Canada

Prices are expected to rise across the region, including:

• Truro & Colchester, Nova Scotia: An 8% increase is forecasted.
• St. John’s, Newfoundland: Prices are set to climb by 8%, highlighting the strong demand in smaller, affordable markets.

Key Trends for 2025

The report identifies several key trends that will shape Canada’s housing market:

1. Buyer Demographics: First-time buyers, move-up buyers, and downsizing retirees will dominate market activity.
2. Demand for Affordable Homes: Smaller homes like townhomes and bungalows will remain in high demand.
3. Affordability Challenges: Highly competitive markets like Toronto and Vancouver will continue to grapple with rising prices and limited inventory.

Looking Ahead

“The current environment is more encouraging than it has been in recent years, particularly for first-time buyers,” says Alexander. However, he cautions that the combination of rising demand and limited supply is likely to push prices higher across the country.

With these trends in mind, buyers and sellers should prepare for an active and competitive housing market in 2025.

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References:

REMAX Canadian Housing Market Outlook (2025)