Activity picked up pace in the final quarter of 2024, leading to moderate price increases and paving the way for a brisk spring market.

Highlights:

• Royal LePage forecasts that the aggregate price of Canadian homes will increase 6.0 percent in the fourth quarter of 2025, compared to 2024’s Q4.

• Housing policy and affordability are expected to be primary ballot box issues shaping voters’ decisions in the federal election.

• Greater Montreal Area’s aggregate home price increased 8.2 percent year-over-year, while the greater Toronto and Vancouver markets recorded more modest gains of 2.3 percent and 0.7 percent, respectively. 

• Of the report’s major regions, and for the third consecutive quarter, Quebec City recorded the highest year-over-year aggregate price increase (11.3 percent) in Q4.

“There are several converging factors revitalizing Canada’s real estate market and making home ownership more attainable,” said Phil Soper, president and CEO of Royal LePage.  “Interest rates have fallen sharply in recent months, with further reductions expected in 2025. We believe the Bank of Canada could lower rates by another 100 basis points by year end, steadily improving affordability. At the same time, new mortgage rules are already helping younger Canadians by increasing borrowing power and reducing monthly carrying costs.” 

“While geopolitical uncertainty and concerns over the Trump administration’s proposed trade policies may weigh on consumer confidence, residential real estate remains largely insulated from such external pressures in the short term.  

“Home prices are likely to trend only modestly upward over the coming year as inventory is absorbed.  This is welcome news for buyers, who can look forward to a more balanced market compared to the frenzied conditions of 2021 and 2022,” continued Soper. 

Impact of pending federal election on Canada’s housing market

An early federal election appears almost inevitable following the resignation of Prime Minister Justin Trudeau and the prorogation of government on January 6th. When the House of Commons reconvenes in late March, an immediate confidence vote is not expected to pass, likely triggering an election by mid-spring. The Liberal party is projected to select a new leader by March 9th.

“With a federal election campaign at home and an aggressive stance on trade expected from the new U.S. administration, Canadians will be understandably nervous. That said, the critical need for housing in Canada transcends political cycles. The next government must prioritize addressing the supply crisis, which affects millions of Canadians seeking affordable shelter and stability for their families,” Soper commented. 

As Parliament has been prorogued, all pending legislation, apart from Private Members' Bills, is nullified. This includes the increase to the capital gains tax inclusion rate introduced in the last spring budget, which affects those who sold a non-primary residence on or after June 25, 2024. Despite this legislation not being formally enacted, the Canada Revenue Agency (CRA) will continue to apply the tax changes unless directed otherwise by the government, in line with standard practice.

Revised mortgage policies and lower lending rates

New lending regulations introduced at the end of 2024 aim to improve accessibility for both first-time homebuyers and existing homeowners. Key changes include expanded eligibility for 30-year amortizations on insured mortgages, now available to all first-time buyers and purchasers of newly constructed homes—an increase from the previous 25-year limit. Additionally, the mortgage insurance cap was raised from $1 million to $1.5 million, allowing buyers with less than a 20 percent down payment to consider higher-priced properties. This adjustment is particularly impactful in Canada’s most expensive real estate markets, where average home prices exceed $1 million. For homeowners renewing their mortgages, the removal of the stress test requirement for uninsured borrowers switching lenders offers greater flexibility and likely improved rates, as banks compete to attract and retain clients. 

“While extending the life of a mortgage may result in higher overall interest paid, the reduction in monthly carrying costs will help address one of the most immediate barriers to affordability. These new policies will make the dream of home ownership attainable for more Canadians,” Soper concluded.

Forecast

Nationally, home prices are forecasted to experience strong quarterly gains in the first half of 2025, fueled by early spring market activity, followed by more moderate increases in the latter half of the year.

Greater Vancouver Market Summary

In Greater Vancouver, the aggregate price of a home rose modestly by 0.7 percent year-over-year to $1,229,000 in the fourth quarter of 2024. However, on a quarterly basis, prices dipped slightly by 0.4 percent.

“The Greater Vancouver real estate market ended the fourth quarter on a high note, with sales activity exceeding last year’s levels, building on the steady upward trend established in October and November.” said Randy Ryalls, general manager of Royal LePage Sterling Realty. “Buyer confidence has notably improved following consecutive interest rate cuts in the second half of 2024, gradually bringing sidelined buyers back into the market.”

According to Ryalls, inventory remains tight across all housing types, though it has increased compared to the same period in previous years.

“We typically see a year end decline in inventory. However, as activity increases, I anticipate that many properties pulled from the market late last year will be relisted in the coming months, alongside new listings,” added Ryalls.  “This boost in inventory should help balance market conditions as we head into what I expect will be a busy first quarter.  Many buyers, particularly first time homebuyers, are eager to transact, recognizing that prices have likely reached their lowest point and that this is the time to enter the market before competition heats up.” 

Looking ahead, Ryalls anticipates a brisk spring market accompanied by steady price growth. “Early indicators for 2025 are strong.  If inventory levels continue to improve as expected, it could alleviate some of the pressure on buyers while maintaining a competitive advantage for sellers.” 

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Explore detailed insights into Canada’s evolving housing market, the impact of economic policies, and projections for 2025. For more detailed findings and expert analysis, read the full report.