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Highlights
- Projected Home Price Growth: Home prices are expected to rise six per cent annually by the end of 2025, with the aggregate price reaching $856,692. Detached homes will see a seven per cent annual increase, while condos will grow by 3.5 per cent annually.
- Regional Standouts: Quebec City leads with an 11% annual price increase forecast, followed by Edmonton and Regina at 9%. Toronto and Vancouver will see steady growth of 5% and 4%, respectively.
- Impact of Mortgage Policy Changes: New rules, including higher insured mortgage caps and extended loan terms for first-time buyers, are set to enhance affordability and drive market activity.
Canadian home prices are set to climb significantly over the next two years, with Royal LePage predicting a six per cent annual increase by the fourth quarter of 2025. In its annual market survey forecast released Wednesday, the real estate brokerage firm attributes this growth to declining interest rates, upcoming changes in mortgage policies, and a surge in buyer activity across the country.
Home Prices on the Rise
Royal LePage projects that the aggregate price of a home in Canada will reach $856,692 by late 2025, up from an estimated $808,200 in the fourth quarter of this year. Detached homes are expected to see the sharpest increase, with prices anticipated to grow seven per cent annually to $900,833 by 2025. Condominiums will rise more modestly, with prices expected to increase by 3.5 per cent annually to $605,993.
“After several years of unusual volatility in the real estate market, key indicators point to a return to stability in 2025,” said Phil Soper, president and CEO of Royal LePage. Soper highlighted that lower interest rates and enhanced borrowing power from updated mortgage rules are rekindling buyer activity, particularly in high-demand urban markets.
Market Recovery and Regional Variations
Canada’s housing market has experienced a prolonged slump since peaking in 2022 due to the Bank of Canada’s aggressive rate hikes to combat inflation. However, with four consecutive rate cuts in recent months, market activity began to rebound in October, coinciding with the central bank’s jumbo 50 basis point rate cut.
Royal LePage anticipates growth across all major markets, with significant gains in regions such as Quebec City, Edmonton, and Regina. Quebec City is expected to see the largest annual percentage increase, with the aggregate price rising 11 per cent to $442,113 by the fourth quarter of 2025. Edmonton and Regina are forecasted to see nine per cent annual growth, reaching $494,860 and $424,247, respectively.
The country’s most expensive markets, Greater Toronto and Greater Vancouver, will also see steady gains. In the GTA, aggregate home prices are forecasted to rise five per cent annually to $1.23 million, while Vancouver will experience a four per cent annual increase to $1.27 million.
Mortgage Policy Changes to Boost Demand
The federal government’s new mortgage policies, effective this month, are expected to play a pivotal role in driving demand. Key changes include raising the cap on insured mortgages from $1 million to $1.5 million, which reduces down payment requirements for higher-value homes. Additionally, first-time buyers and those purchasing new builds can now access 30-year mortgages.
These measures will be especially impactful in high-priced markets like Toronto and Vancouver, where home prices often exceed $1 million. A separate report by TD Bank suggests these policy shifts will contribute to higher average home prices in 2025.
