Canadian home prices expected to rise until 2025 (2024)

FAQs

Canadian home prices expected to rise until 2025? ›

In many ways, 2025 is a hard date for Canadian real estate. Prices will continue to rise, at least at a slower pace than in the past few years. Yet it's getting increasingly more difficult to read the market. For investors, this is a time of challenges and opportunities alike.

The next five years in the Canadian real estate market will be marked by steady growth. While the flurry of activity witnessed in 2020, 2021, and 2022 has tapered, the market remained buoyant in 2023-2024.

The CREA's experts say the average home price in Ontario will go up by 0.7% in 2024 and another 3.9% in 2025.

The average selling price of a home in Canada decreased by 3.9% year-over-year to $724,800 in July 2024. The average selling price of a single-family home in Canada decreased by 3.7% year-over-year to $801,600 in July 2024.

To get an idea of the magnitude of the housing supply crisis, CMHC recently updated its Supply Gaps Estimate report in hopes of determining how many housing units beyond current trends would need to be built between now and 2030 to restore affordability. The number CMHC came up with is 3.5 million.

In the long-term, the Canada Interest Rate is projected to trend around 3.00 percent in 2025, according to our econometric models. In Canada, benchmark interest rate is set by the Bank of Canada's (BoC) Governing Council.

National Housing Market Predictions for 2025-2029

Although a recession is no longer predicted, economic growth is expected to decline from 2023's fairly robust rate of 2.5% to 2.1% in 2024 and 2% in 2025.

Prices peaked in the Spring of 2022, and according to our analysis, many Canadian housing markets are already bursting bubbles. There has been a price turnaround, but purchases are well below the 10-year average. In a May Reuters poll, the average analyst expects Canadian home prices to rise 1.5% per cent in 2024.

Demand for homes will push prices up throughout the projection horizon. By 2025, prices could reach the peak level recorded in early 2022 and surpass it in the following year. Affordability will therefore be a growing concern.

Will housing ever be affordable again in Canada? ›

House prices in Canada will keep on rising every day; as long as there is population growth and immigration, house prices will continue to rise. In conclusion, there is no guarantee that real estate in Canada will become more affordable, not to mention the chance that it can be even more expensive than it already is.

Immigration. The influx of new immigrants to Canada increases the demand for housing, driving up house prices as supply struggles to meet this growing demand. This inflow is especially true in cities such as Toronto and Vancouver, which have seen some of the highest rates of immigration in recent years.

National home sales are forecast climb a further 6.2% to 501,902 units in 2025 as interest rates continue to decline and demand continues to flow back off the sidelines. The national average home price is forecast to rise by 5% from 2024 to $729,319 in 2025.

We estimate Canada will need to grow its housing stock by an average of 315,000 units every year between now and 2030 just to keep up with household formation. That's more than a third above the pace of housing completions in the past few years (which ranged between 220,000 and 240,000 units annually).

The International Monetary Fund (IMF) has revised its forecast for the Canadian economy, predicting growth of 1.3 percent this year and 2.4 percent in 2025, according to a report released on Wednesday.

As a result of less-than-stellar market activity so far this year, CREA (Canadian Real Estate Association) recently downgraded its 2024 housing market prediction to: A 6.1% increase in home sales by year-end, from an original musing of 10.5%

As of September 2024, 5 year fixed rates in the mid 4% range are approximately 0.75% – 1% lower than variable rates in the mid 5% range. So by locking into a 5 year fixed rate now, certainty for rate savings is guaranteed.

Analysts project 11.5% earnings growth and 5.5% revenue growth for S&P 500 companies in 2024. Fortunately, analysts see positive earnings and revenue growth for all eleven market sectors this year.

Home values will be supported by limited housing supply as the population blooms and affordability constraints limit price growth. We expect a rise of 1.2 per cent in the MLS® average price in 2024 and an acceleration of 4.8 per cent in 2025.