Sales activity began to flourish again in many major Canadian markets in the final months of 2024, following sluggish demand over summer. This trend should continue well into 2025, according to multiple industry reports.
The fourth quarter of 2024 saw national sales up 10 per cent from the third quarter and it stood among the stronger quarters for activity in the last 20 years, not accounting for the pandemic, reports the Canadian Real Estate Association (CREA).
Although the number of homes sold across the country declined in December compared to October and November, this was likely due to the fall surge in supply having being picked over, not a demand issue.
There were 128,000 properties listed for sale on all Canadian multiple listing service (MLS) systems at the end of 2024, up 7.8 per cent from a year earlier, but still below the long-term average of around 150,000 listings.
Several converging factors are revitalizing the real estate market and making home ownership more attainable.
Interest rates have fallen sharply, with further reductions expected this year. Many economists speculate the Bank of Canada could lower rates by another 100 basis points by the end of 2025, steadily improving affordability.
At the same time, new mortgage rules introduced Dec. 15 are already helping younger people by increasing borrowing power and reducing monthly carrying costs.
First-time homebuyers can now take advantage of a 30-year amortization on both resale and newly constructed homes. Eligibility for the extended amortization period was originally limited to purchases of new builds. That rule came into place last August. Prior to this, the maximum amortization limit was 25 years.
The second change is to the price cap for insured mortgages, which has increased to $1.5 million from $1 million for all homebuyers. Under the new rule, buyers have the option to pay a lower down payment. Before, anyone purchasing a home for more than $1 million was required to make a 20 per cent down payment to qualify for an insured mortgage.
While housing market activity may take a breather over winter with fewer properties for sale, CREA expects the combination of two and a half years of pent-up demand and lower borrowing costs, in conjunction with the usual burst of spring listings, will lead to a further uptick in market activity this year.
Some 532,704 residential properties are predicted to trade hands via Canadian MLS systems in 2025, representing an 8.6 per cent increase from 2024. This represents an upward revision to the previous CREA forecast for a 6.6 per cent increase.
However, this bounce back in demand is expected to play out differently across Canada, with British Columbia and Ontario to see bigger rebounds on the sales side owing to how low sales are there currently, together with more plentiful inventories, and less scope for price gains in these already expensive parts of the country. Real estate brokerage firm Royal LePage is predicting that the average price of a home in Greater Vancouver and Ottawa will increase four per cent in the fourth quarter of 2025, compared to the same quarter last year. The Greater Toronto Area is forecasted to fare slightly better, with the average price of a home to increase five per cent over the same time period.
By contrast, increased demand is expected to more greatly impact the price side in Alberta and Saskatchewan, where sales were already near record levels in 2024, inventories are currently near 20-year lows and prices are still relatively more affordable. In particular, Edmonton and Regina are predicted to see substantial price gains by the fourth quarter, both up nine per cent year-over-over, according to Royal LePage. Calgary’s price growth is forecasted to be more modest in comparison — four per cent — now that inventory levels are higher than they have been in recent years, resulting in more balanced conditions.
Manitoba, Quebec and the Atlantic provinces are all foreseen to fall between these extremes, with both more sales and higher prices in 2025. Quebec City recorded 11.3 per cent average price growth in the fourth quarter of 2024. This represents the highest year-over-year price increase among Canada’s major regions for the third consecutive quarter. Royal LePage foresees this trend continuing and the average price of a home will increase 11 per cent in the final quarter of this year, compared to the same quarter in 2024.
Despite recent and forecasted improvements in market conditions, there are many factors at play that could impact consumer confidence and, in turn, activity in 2025. They include political instability in Ottawa — an early federal election is anticipated for mid-spring — friction with the new U.S. administration over its aggressive stance on trade and a weakening Canadian dollar.
That said, Canada’s housing market is fundamentally driven by domestic factors. With strong full-time job growth, improving housing supply in key markets and more accessible financing, healthy activity levels are predicted to persist, even as broader economic challenges unfold.