Canada's Residential Property Market Analysis 2025

As trade uncertainty and economic headwinds weaken consumer confidence and suppress transactions, the Canadian housing market continues to soften, sales prices in metro areas demonstrating decelerating growth and asking rents in decline across the country.

This extended overview from Global Property Guide covers key aspects of the Canadian housing market and takes a closer look at its most recent developments and long-term trends.

Table of Contents

• Housing Market Snapshot
• Historic Perspective
• Demand Highlights
• Supply Highlights
• Rental Market
• Mortgage Market
• Socio-Economic Context

Housing Market Snapshot

The Canadian housing market continued to soften in April 2025, weighed down by increasing uncertainty surrounding the trade policy with the United States and weakening consumer confidence. According to the seasonally adjusted Teranet-National Bank House Price Index, which tracks changes in single-family home prices across 11 major metropolitan areas, prices rose by just 0.2% year-on-year, a notable deceleration from the 2.3% growth recorded in the previous month.

Performance varied widely by region. Price increases were registered in eight of the 11 cities included in the composite index. Quebec City led with a 13.4% annual gain, followed by Montreal at 6.6% and Winnipeg at 6.5%. In contrast, Toronto (-3.5%), Hamilton (-3.0%), and Vancouver (-0.7%) posted year-over-year declines.

"Canada's housing market entered 2025 with mixed momentum," commented Phil Soper, president and CEO of Royal LePage. "In Ontario and British Columbia, softer sales reflect consumer caution in the face of economic headwinds. In contrast, markets in Quebec, the Prairies, and Atlantic Canada are demonstrating surprising resilience, buoyed by pent-up demand, falling interest rates, and chronically low inventory. This uneven performance is a hallmark of a market in transition."

Canada's house price annual change:

Data Source: Teranet–National Bank House Price Index.

Nationally, the average price of homes sold, as reported by the Canadian Real Estate Association (CREA), declined by 3.9% year-on-year in April 2025 to CAD 679,866 (USD 486,035), based on non-seasonally adjusted data. CREA's latest quarterly forecast projects a further modest annual decline of 0.3% in 2025, bringing the national average to CAD 687,898 (USD 491,777), before a slight rebound of 1.2% to CAD 696,074 (USD 497,622) in 2026.

Data Source: CREA.

Regionally, the highest average home prices in April 2025 were recorded in British Columbia and Ontario, also the provinces experiencing the steepest year-on-year price corrections. More affordable markets showed stronger momentum, a trend CREA expects to persist throughout the remainder of the year.

Average residential prices by province:

Historic Perspective:

Regional Divergence and the Core Drivers of Canadian Price Movements

In the mid-2000s, the Canadian housing market saw strong growth supported by a robust economy, low unemployment, and favorable borrowing conditions. House prices increased significantly, particularly in Calgary and Edmonton, where the Teranet-National House Price Index surged by 44.50% and 42.35% year-on-year in 2006, driven by a booming energy sector and rising incomes.

The global financial crisis of 2008 marked a temporary halt in price growth, with national home prices contracting by 1.66% that year. However, the Canadian market proved relatively resilient compared to the US, as stricter lending standards and a more conservative banking system helped prevent a severe collapse. The national market quickly rebounded in 2009 with an 8.24% increase, as low interest rates and government stimulus revived demand.

The early 2010s were characterized by moderate and regionally uneven price growth. Toronto and Vancouver began to diverge from other cities, notably Edmonton and Calgary, where energy-related volatility curbed momentum. By mid-decade, a new wave of price acceleration began, supported by strong immigration, low borrowing costs, and a growing investor presence. In 2016, Toronto recorded a dramatic 21.7% year-over-year increase, while Vancouver reached nearly 17%.

Regulatory interventions followed. The federal government implemented a series of macroprudential measures-tightening mortgage qualification rules, taxing foreign buyers in British Columbia and Ontario, and introducing a mortgage stress test in 2018. These actions temporarily cooled prices in key markets, as seen in the slower growth in 2018 and 2019.

The onset of the COVID-19 pandemic in 2020 ushered in an unexpected boom. Ultra-low interest rates, a surge in remote work, and shifting housing preferences triggered an explosive demand for larger properties in suburban and smaller urban markets. Price growth peaked nationally in 2021 at 17.02%, with Ottawa, Montreal, and Toronto among the top performers.

By 2022, however, a rapid tightening cycle by the Bank of Canada to combat inflation slowed the market dramatically. National price growth flatlined, and some cities, notably Toronto and Vancouver, experienced year-on-year declines. Calgary and Edmonton bucked this trend, reflecting more affordable housing and demographic inflows.

The Canadian housing market showed signs of stabilization in 2023 and into 2024, with only modest gains across most cities. Calgary remained one of the strongest markets with consistent growth, while Montreal also posted solid gains. Persistent supply constraints, population growth, and strong labor markets continued to support home values, despite higher borrowing costs.

Note: Year-on-year change as of December.
Data Sources: Teranet and National Bank of Canada.

Demand Highlights:

Trade Uncertainty and Economic Headwinds Suppress Sales

Economic uncertainty and persistent trade tensions continue to suppress home sales activity across Canada. CREA reports that 149,428 residential properties were sold nationwide during the first four months of 2025, reflecting a 5.97% decline compared to the same period in 2024. On a seasonally adjusted annualized basis, this equates to 430,008 units. "At this point, the 2025 Canadian housing story would best be described as a return to the quiet markets we've experienced since 2022, with tariff uncertainty taking the place of high interest rates in keeping buyers on the sidelines," said Shaun Cathcart, CREA's Senior Economist.

CREA's initial housing market forecast, released in January 2025, anticipated a departure from the flat conditions of recent years, projecting a notably active spring. However, subsequent shifts in US trade policy significantly eroded consumer confidence. In light of the heightened uncertainty surrounding tariffs and broader economic implications, the association revised its projections in April, reducing the anticipated number of home sales by 50,000 units. The updated forecast now estimates 482,673 residential transactions in 2025, effectively unchanged from 2024 levels. A moderate recovery is expected in 2026, with sales projected to reach 496,487 units, representing a 2.9% year-over-year increase.

Data Source: CREA.

Regional performance continues to vary significantly. 'While the trend of declining monthly sales has been evident in many parts of the country in recent months, several regions continue to experience strong demand, constrained inventory, and upward price pressure,' said Valérie Paquin, Chair of CREA's 2025-2026 Board of Directors.

The most robust sales growth in 2025 - exceeding 7% year-over-year - is forecast in Newfoundland and Labrador, Quebec, and Prince Edward Island. Conversely, sales activity is expected to decelerate in Ontario, British Columbia, and Alberta.

Seasonally adjusted annual home sales by province:

Supply Highlights:

New Starts Rebound, While Structural Supply Gaps Persist

According to data from the Canada Mortgage and Housing Corporation (CMHC), national housing starts reached a seasonally adjusted annual rate (SAAR) of 278,606 units in April 2025, representing a 15.33% increase compared to 241,565 units in April 2024. "A bounce-back in homebuilding was expected after steep declines over the Feb/Mar period. Still, April's surge surpassed expectations and should offer some near-term lift to residential investment spending and overall GDP," noted Rishi Sondhi, economist at TD Economics.

Data Source: CMHC.

This increase was primarily driven by stronger activity in Quebec and the Prairie provinces, particularly Alberta and Saskatchewan. In contrast, Ontario and British Columbia recorded year-over-year declines of 9.66% and 2.64%, respectively.

Despite the current positive dynamic, CMHC's February 2025 forecast anticipates a moderate slowdown in housing starts, although activity is expected to remain above the 10-year historical average. The projected deceleration is largely attributed to weaker investor demand, which is curbing new condominium apartment construction.

Regional variations are likely to persist, with a more pronounced slowdown projected in Ontario, a gradual decline in British Columbia, and relative stability in Alberta. Rental construction is expected to remain elevated through 2026, supported by prior momentum, before potentially moderating in 2027. Modest growth in ground-oriented housing is anticipated, though high development costs and strong resale supply may continue to constrain new construction.

New housing starts by province (seasonally adjusted annualized rate):

At a broader level, persistent housing supply shortages remain a fundamental challenge in the Canadian market. According to the latest estimates available from CMHC, addressing the country's housing affordability will require an additional 3.45 million housing units by 2030 beyond what is currently projected. These supply gaps are estimated to be most pronounced in Ontario (1.48 million units), Quebec (0.86 million), and British Columbia (0.61 million).

Rental Market:

Asking Rents in Decline, Regional Performance Uneven

Along with the overall stabilization of the macroeconomic landscape in Canada, rental inflation has moderated in the second half of 2024 and early 2025, with the rents component of the Consumer Price Index (CPI) recording a 5.2% year-on-year increase in April 2025, down from a decade-high level of 8.9% previously reported in August 2024.

Canada's rent price index:

Data Source: OECD.

In parallel, the more immediate indicator of current market conditions - asking rents - has been in decline in year-on-year terms since October 2024, according to the figures from the listing platform Rentals.ca. In April 2025, the average asking rent for all types of housing combined showed a 2.8% annual decrease nationwide; the decrease was observed for all types of properties, with the most pronounced downward movement recorded in the houses and townhouses category (-6.8% year-on-year), followed by condominiums (-5.2%year-on-year), while purpose-built apartment rents dropped by just 0.9% year-on-year.

Data Source: Rentals.ca.

Despite the decelerating growth followed by a decline in recent months, average asking rents reported by Rentals.ca are now about 28% higher than the pandemic low recorded four years ago in April 2021, reaching CAD 2,105 (USD 1,505) for purpose-built rental apartments, CAD 2,210 (USD 1,580) for condos, and CAD 2,166 (USD 1,548) for houses/townhouses nationwide in April 2025.

Regionally, the highest average rents for apartments and condos were reported in British Columbia, Ontario, and Nova Scotia, while other provinces remained more affordable, with rents below the national average. The year-on-year dynamic also varied notably among the main submarkets. Compared to the levels reported during the same period a year ago, Alberta, British Columbia, Ontario, and Quebec showed decreases, while Saskatchewan, Nova Scotia, and Manitoba recorded moderate but positive dynamics in asking rents.

Based on the platform's data, the downward correction was most apparent in traditionally more expensive submarkets, while rents in more affordable locations stagnated or trended upwards. Of the five largest Canadian cities, only Ottawa showed annual growth in asking rents for apartments and condos in April 2025 (2%), while Edmonton remained stable, and Toronto, Montreal, and Calgary posted rent declines at -5%, -3%, and -9% year-on-year, respectively.

In terms of gross rental yields for residential units in Canada, research carried out by Global Property Guide in Q1 2025 showed the average potential performance at 5.46%, 0.36 percentage points up from previously reported in Q2 2024. Regionally, the highest yields among the assessed submarkets were observed in Calgary (6.96%) and Ottawa (6.02%), while Vancouver, Montreal, Toronto, and Hamilton showed yields below 6%.

Average asking rent for apartments and condos in selected submarkets:

As rental supply has grown faster than new demand since 2024, experts anticipate the market to ease further in the upcoming periods, with higher vacancy rates slowing rent growth. "We expect lower immigration and an increase in first-time homebuyers to continue to reduce rental demand throughout 2025-2027," said the 2025 housing market outlook from the CMHC. "Supply will continue to expand as new rental units are completed, leading to higher vacancies and slower rent increases."

In general, the Canadian rental market has been expanding long-term, with the share of households renting rather than owning their residence increasing from 30.6% in 2011 to 32.2% in 2016 and 33.4% in 2021, according to Census data.

Mortgage Market:

Interest Rates Continue to Climb Down, New Lending Rebounds

Canada's mortgage loan interest rates:

Data Source: Bank of Canada.

In late 2024 and early 2025, the Bank of Canada (BOC) kept reducing its policy rate in a series of cuts, eventually bringing the target for the overnight rate to the current standing of 2.75%, 225 b.p. down from the peak level of 5.00% previously maintained between July 2023 and June 2024. The most recent policy announcement in April 2025, however, kept the rate unchanged, citing the shift in direction of US trade policy and unpredictability of tariffs, diminished prospects for economic growth, and raised inflation expectations as reasons for a hold. "In Canada, the economy is slowing as tariff announcements and uncertainty pull down consumer and business confidence. Consumption, residential investment, and business spending all look to have weakened in the first quarter," noted the central bank. "Trade tensions are also disrupting recovery in the labor market."

Data Source: BOC.

Following the overall downward trajectory of the policy rate, interest rates charged on new residential mortgages by chartered banks, while still elevated compared to the pre-2022 baseline, also continued to decline, with year-on-year declines observed for all categories of loans monitored. As of month-end April 2025, the BOC reported the weighted average interest rate at 4.63% for new insured mortgages (down from 5.75% a year ago and 5.48% two years ago) and 4.70% for new uninsured mortgages (down from 5.95% a year ago and 5.54% two years ago). The indicator was also down year-on-year for existing residential mortgages, standing at 3.77% for insured loans and 4.39% for uninsured loans in April 2025.

Interest rates charged on residential mortgages by chartered banks, month-end:

The improving lending conditions facilitated a rebound in new loan originations, with the total value of new residential mortgages advanced by the chartered banks demonstrating a 15.2% annual growth in 2024 after two years of two-digit declines. In the first three months of 2025, the total value of new mortgages advanced by banks reached CAD 131.6 billion (USD 91.6 billion), which was 87.3% above the comparable period last year, demonstrating an even stronger growth trend.

Based on the BOC reporting, uninsured mortgages accounted for over 83% of the funds advanced in January-March 2025, a growing share compared to about 73% five years ago and 64% ten years ago. An analysis from Statistics Canada explains that this category of loans has been driving the overall expansion of the residential lending market in the country in recent years. Uninsured mortgages, predominant since 2017, have been growing faster than insured ones due to steady increases in house prices and specifics of the regulatory constraints that make homes valued over CAD 1 million (about USD 0.7 million) ineligible for insurance and require at least a 20% down payment. Consequently, uninsured mortgages are more prominent among single-detached homes, typically carrying higher values.

Data Source: BOC.

The total value of outstanding residential mortgage debt in Canada increased by 4.1% year-on-year in 2023, an accelerated growth compared to 3.5% in 2023 but weaker than 7.5% in 2022 and 10.4% in 2021. The expansion was more pronounced in the non-bank sector of the market (5.6% year-on-year) compared to chartered banks (3.7% year-on-year). As of March 2025, the value of residential mortgage liabilities of households in Canada stood at CAD 2.26 trillion (USD 1.57 trillion), with 22.5% of the stock maintained by non-bank lenders.

Sized against the Canadian economy, the residential mortgage market was equivalent to an estimated 73.1% of GDP at current prices in 2024, the ratio having decreased from the 2020 peak of 79.2% but remaining on an upward trajectory long-term. As of the most recent nationwide Census (2021), 40% of all Canadian households and 60% of owner households had a mortgage on their residence.

Data Sources: Statistics Canada, OECD.

Socio-Economic Context:

Strong Impact of Global Slowdown, Slower Population Growth

In the last two years, the Canadian economy demonstrated moderate 1.5% real GDP growth, which is now projected to weaken further as the impact of trade tensions with the US and global slowdown materializes fully. According to the Organization for Economic Co-operation and Development (OECD), Canada will be among those hit hardest. "Since February 2025, trade tensions and increased tariffs on imports to the United States heavily weighed on Canada's external perspectives, given the interlinkages of the two economies," said the latest issue of their economic outlook. "The heightened uncertainty about tariff levels also burdens long-term spending and investment decisions." The forecast from the International Monetary Fund (IMF) expects the economy to reach 1.4% growth this year, while the OECD assessment is even more conservative, projecting 1.0% growth for 2025.

Adding to the challenges the Canadian economy now faces, increased government spending, particularly on housing affordability and new social programs, has recently worsened the general government balance, although it had previously been in surplus, as pointed out by the OECD.

At the same time, Consumer Price Index (CPI) inflation in Canada decelerated from a 6.8% peak in 2022 to 3.9% in 2023 and 2.4% in 2024, most recently reported by Statistics Canada at 1.7% in April 2025. This year, headline inflation is expected to rise slightly (as the impact of higher tariffs on consumer prices is to be partially offset by lower energy prices due to the removal of the fuel charge) before falling back towards 2% next year.

Data Source: IMF.

Immigration continues to affect nearly all aspects of the Canadian economy, supporting output growth and boosting labor supply but also likely moderating wage growth and adding to the demand for already scarce housing in the context of current supply constraints. "The sharp increase in household formation is one among many factors that have pushed housing affordability to its worst level since the early 1990s," said the IMF staff report in 2024.

Based on figures from Statistics Canada, in the last three years, the country experienced accelerated population growth, hiking from a long-time average of 1.1% annually to 1.8% in 2021-2022, 2.9% in 2022-2023, and 3.0% in 2023-2024. The spike in total population coincided with a sharp increase in international immigration that exceeded 493 thousand people in 2021-2022, 468 thousand in 2022-2023, and 464 thousand in 2023-2024. At the same time, the net increase in non-permanent residents exceeded 712 thousand people in 2022-2023 and 775 thousand in 2023-2024.

Permanent immigration in calendar year 2024 was close to the annual target set by the government, amounting to 483,591 permanent immigrants － the highest number welcomed in any year since 1972 (when comparable data became available).

Recent data, however, indicates that even though population growth in Canada remains high, it now shows signs of slowing as immigration moderates. "Smaller gains from international migration continue to slow population growth," said the latest release from Statistics Canada. According to the authority, while the total number of non-permanent residents in the country continues to grow (3,020,936 or 7.3% of the total population as of January 1, 2025), the rate has been slowing since October 2023.

Note: Based on Population estimates and Estimates of the components of demographic growth, annual, on July 1. 
Data Source: Statistics Canada.

The 2024 IMF staff report highlighted the impact of the immigration spike on Canada's labor market: "The increased supply of foreign workers filled a need in the labor market and supported near-term growth, while likely moderating wage increases. This integration has been supported by relatively robust employment growth, consistent with falling vacancy-unemployment ratios <…>. That said, the unemployment rate has risen <…>, suggesting some emerging softening in the labor market."

The nationwide unemployment rate was most recently reported by Statistics Canada at 6.9% in April 2025, up from 6.2% a year ago and 5.1% two years ago. To contain and adjust migration inflows according to the needs of the country's economy, the Canadian government previously capped student and temporary worker visas and projected a decrease in overall permanent resident intake while allocating a greater share of admissions to high-skilled workers in critical sectors.

Data Source: Statistics Canada.

Overall, the level of uncertainty about US tariff levels and the impact on the Canadian economy remains high, complicating the formulation of clear projections, experts agree. "There is a range of scenarios for how US trade policy could unfold, which leads to a wide range of outcomes for Canadian inflation and economic growth," pointed out the BOC in the outlook section of their April 2025 monetary policy report.

The central bank now outlines two diverging potential trajectories for the upcoming periods: inflation in Canada could remain around or below target or temporarily rise above 3%, while GDP growth could stall for one quarter, or there could be a significant recession that permanently lowers the standard of living in Canada.

Sources:

1. Government of Canada
   1. Strengthening Temporary Residence Programs for Sustainable Volumes: https://www.canada.ca/en/immigration-refugees-citizenship/news/2024/09/strengthening-temporary-residence-programs-for-sustainable-volumes.html
   2. Supplementary Information for the 2025-2027 Immigration Levels Plan: https://www.canada.ca/en/immigration-refugees-citizenship/news/notices/supplementary-immigration-levels-2025-2027.html
2. Bank of Canada
   1. Policy Interest Rate: https://www.bankofcanada.ca/core-functions/monetary-policy/key-interest-rate/
   2. Bank of Canada holds policy rate at 2.75%: https://www.bankofcanada.ca/2025/04/fad-press-release-2025-04-16/
   3. Monetary Policy Report April 2025: https://www.bankofcanada.ca/publications/mpr/mpr-2025-04-16/
   4. Exchange Rates: https://www.bankofcanada.ca/rates/exchange/
   5. Interest Rates Charged for New and Existing Lending by Chartered Banks: https://www.bankofcanada.ca/rates/banking-and-financial-statistics/interest-rates-for-new-and-existing-lending-by-chartered-banks
   6. Funds Advanced and Outstanding Balances for New and Existing Lending by Chartered Banks: https://www.bankofcanada.ca/rates/banking-and-financial-statistics/funds-advanced-and-outstanding-balances-for-new-and-existing-lending-by-chartered-banks/
3. Statistics Canada
   1. 2021 Census of Population Key Indicators: https://www12.statcan.gc.ca/
   2. Credit Liabilities of Households: https://www150.statcan.gc.ca/
   3. Key Trends in Mortgage and Non-Mortgage Loans: https://www150.statcan.gc.ca/
   4. Labour Force Survey, April 2025: https://www150.statcan.gc.ca/
   5. Consumer Price Index, April 2025: https://www150.statcan.gc.ca/
   6. Canada's Population Estimates: Age and Gender, Q4 2024: https://www150.statcan.gc.ca/
   7. Canada's Population Estimates: Age and Gender, July 1, 2024: https://www150.statcan.gc.ca/
4. Canada Mortgage and Housing Corporation (CMHC)
   1. Monthly Housing Market Data: https://www.cmhc-schl.gc.ca/
   2. 2025 Housing Market Outlook: https://assets.cmhc-schl.gc.ca/sites/cmhc/professional/housing-markets-data-and-research/market-reports/housing-market-outlook/2025/housing-market-outlook-02-2025-en.pdf
   3. Housing Starts for April 2025: https://www.cmhc-schl.gc.ca/
   4. Housing Shortages in Canada. Updating How Much Housing We Need by 2030: https://assets.cmhc-schl.gc.ca/
5. Teranet and National Bank of Canada
   1. Teranet-National House Price Index: https://housepriceindex.ca/
   2. Teranet-National Bank House Price Index Continues to Decline in April: https://housepriceindex.ca/
6. The Canadian Real Estate Association (CREA)
   1. Monthly Housing Market Statistics: https://stats.crea.ca/
   2. Quarterly Housing Market Forecasts: https://www.crea.ca/
   3. Canadian Homes Sales Drop as CREA Downgrades 2025 Forecast: https://www.crea.ca/
7. International Monetary Fund (IMF)
   1. Country Overview: Canada: https://www.imf.org/
   2. IMF Staff Country Report: https://www.imf.org/
8. Organization for Economic Co-operation and Development (OECD)
   1. OECD Data Explorer: https://data-explorer.oecd.org/
   2. Canada Economic Snapshot: https://www.oecd.org/
   3. OECD Economic Outlook, Volume 2025 Issue 1: Canada: https://www.oecd.org/
9. Fitch Ratings
   1. Fitch Affirms Canada at 'AA+'; Outlook Stable: https://www.fitchratings.com/
10. Deloitte
    1. Canada Economic Outlook, Spring 2025: https://www.deloitte.com/
11. Rentals.ca
    1. May 2025 Rent Report: https://rentals.ca/
12. TD Economics
    1. Canadian Housing Starts (April 2025): https://economics.td.com/
13. Royal LePage
    1. A Tale of Two Markets: Real Estate Activity Trending Up in Canada's More Affordable Regions, Treading Water in the Most Expensive: https://www.royallepage.ca/