30th Dec 2024: The Canadian housing market is expected to bounce back strongly in 2025, according to a report by RE/MAX, thanks to falling interest rates and new government policies.
After a sluggish 2023 and slower-than-expected recovery in 2024, the Bank of Canada cut interest rates five times, starting in June. Although this encouraged buyers to return to the market, not everyone jumped in right away. Experts now predict stronger activity in 2025, driven by lower borrowing costs and more buyer-friendly rules, despite ongoing affordability challenges.
Home sales in November were up 26% compared to last year, marking two straight months of significant growth. From January to November, total sales rose 6.9% compared to 2023. RE/MAX anticipates sales will increase in 33 out of 37 Canadian regions in 2025, with a national average price rise of 5%.
First-time buyers are expected to play a key role in the recovery, according to Christopher Alexander, president of RE/MAX Canada. He emphasized that falling interest rates and better consumer confidence will boost activity.
The Bank of Canada recently cut its policy rate to 3.25% and signaled slower future cuts. This followed a period of high rates, which had kept many buyers out of the market. However, experts warn that as rates drop and demand grows, competition may push prices higher.
Hamilton broker Mike Heddle predicts a shift toward a balanced or seller’s market in 2025, with increased buyer confidence and more offers on homes. TD economist Rishi Sondhi expects strong demand in the first half of 2025 but says it may taper off later.
Recent policy changes, such as extending mortgage terms for first-time buyers and raising the insured mortgage cap, should also boost sales and prices. TD forecasts a 16% rise in home sales and an 8% increase in average prices in 2025.
Victor Tran, a mortgage expert, highlighted additional measures like the removal of a stress test for uninsured mortgage renewals, which could make the spring housing market particularly active.
While affordability is slowly improving, challenges remain. Experts advise buyers to act within their means and avoid trying to perfectly time the market.
