Residential Price Growth Forecasted for 2025 with Interest Rate Cuts Driving Market Rebound
Canadians are looking forward to 2025 with optimism about the housing market, especially after a series of interest rate cuts in late 2024. RE/MAX Canada and its network of brokers and agents are predicting a more active market next year, with the national average residential price expected to go up by five percent. Sales are also forecasted to rise in 33 out of 37 regions surveyed, with potential increases reaching up to 25 percent.
This positive outlook is particularly noticeable among first-time homebuyers, as seven percent of those surveyed expressed more confidence in entering the market in 2025. In fact, RE/MAX Canada found that first-time homebuyers are expected to be the driving force behind market activity in 81 percent of regions surveyed.
Despite ongoing challenges related to affordability, changes in interest rates, and adjustments to mortgage stress testing are providing relief to potential buyers. Christopher Alexander, President of RE/MAX Canada, believes that these changes, along with increased sales and limited inventory, are likely to result in higher prices in Canadian housing markets in the upcoming year.
A recent Leger survey revealed that 73 percent of Canadians continue to view home ownership as a top investment choice. Nearly half of Canadians believe that owning a home is achievable, and 40 percent are willing to explore new neighborhoods to address affordability concerns. Interestingly, some key trends for 2025 include an increased focus on residential properties and areas less susceptible to climate change, as well as a growing confidence in working with professional real estate brokers or agents.
RE/MAX brokers and agents provided insights into regional market trends, indicating that 44 percent of regions are expected to favor sellers, 33 percent will balance out, and 17 percent will favor buyers in 2025. The majority of regions also noted that first-time homebuyers are a significant audience driving the market nationally.
In Western Canada, regions like British Columbia and the Prairies are likely to see average residential prices rise by three to 10 percent in 2025. For instance, sale prices in Kelowna/Central Okanagan, Vancouver Island, and Greater Vancouver Area are expected to increase, as well as in Calgary, Edmonton, and Winnipeg. GVA and Victoria are among the areas anticipating seller’s markets, while others are balanced or favor buyers.
In Ontario, economic conditions are expected to impact the housing market, with Toronto predicting a slight price increase and other regions like Niagara and Hamilton also expecting price growth. Ontario remains an attractive destination for homebuyers, with various regions experiencing different market conditions, such as balanced markets and periods of high demand due to affordability concerns in neighboring provinces.
