Canada’s house prices increasing again

Canada’s house prices are increasing again, despite the continued decline in both residential property sales transactions and weak construction activity.

In Q1 2024, house prices in Canada’s eleven major cities rose by 4.51% as compared to a year earlier, in sharp contrast to the prior year’s 4.62% fall, according to figures from Teranet – National Bank of Canada. When adjusted for inflation, house prices increased by 1.56% y-o-y in Q1 2024.

“The market has been showing some early signs of life over the last couple of months, probably no surprise given how much pent-up demand is out there,” said CREA Chair Larry Cerqua. “There’s a consensus that the market will probably look quite a bit different this year compared to 2022 and 2023.”

All of the country’s eleven major cities saw a house price growth during the year to Q1 2024. Calgary recorded the biggest house price increase of 11.7% y-o-y in Q1 2024, followed by Quebec (10%), and Halifax (8.4%). Modest house price growth was seen in Montreal (4.4%), Vancouver (4.3%), Hamilton (4%), Toronto (3.9%), Ottawa (3.6%), Victoria (3.6%), and Winnipeg (3%). Edmonton registered the lowest price growth of just 1.9%.

Yet quarter-on-quarter, nationwide house prices fell slightly by 0.42% (-1.35% inflation-adjusted) during the latest quarter.

Canada’s house price annual change

Figures from the Canadian Real Estate Association (CREA) are more subdued, with the actual national average sales price increasing slightly by 1.1% in Q1 2024 from a year earlier (but declined by 1.7% in real terms).

By property type:

  • One-story single-family home prices rose on average by 2.4% y-o-y in Q1 2024 (fell slightly by 0.5% inflation-adjusted).
  • Two-story single-family home prices increased 1.8% y-o-y in Q1 2024 (-1.1% inflation-adjusted).
  • Townhouse prices were up by 1.2%, on average, over the same period (-1.6% inflation-adjusted).
  • Apartment prices increased by 1.3 y-o-y in Q1 2024 but fell by 1.5% when adjusted for inflation.

The national average home price stood at CA$ 718,400 (US$520,599) in Q1 2024, according to CREA. British Columbia and Ontario had the most expensive housing markets in the country, with average prices of CA$ 996,400 (US$700,315) and CA$ 867,900 (US$628,936), respectively.

Both demand and supply continue to fall. During 2023, the total number of residential property sales transactions fell by 11.2% y-o-y to 445,514 units, following a huge decline of 25.1% in 2022, according to figures from CREA.

Likewise, the total number of dwelling starts in Canada (Centres 10K+ population and over) fell by 7% y-o-y to 223,513 units in 2023, following a 1.5% decline in 2022, according to data released by the CMHC. Dwelling completions also fell by 4.3% to 188,689 units in 2023 from a year ago, following a decline of 2.6% in 2022.

Canada experienced an economic slowdown last year, registering a real GDP growth of a meager 1.2%, down from expansions of 3.4% in 2022 and 5% in 2021, according to Statistics Canada. Excluding the pandemic year of 2020, last year’s growth is the slowest pace since 2016, as economic activity slowed due to market pressures caused by high-interest rates, which was aggravated further by the adverse effects of forest fires, drought, and strikes.

Overall economic conditions are expected to gradually improve. The Bank of Canada forecasts real GDP growth of 1.5% this year and another 2.2% in 2025.

A long and steady boom

Canadian house prices have risen almost continuously for two decades:

  • From Q1 2000 to Q1 2009, house prices rose by 79% (49% inflation-adjusted), due to low interest rates and economic growth.
  • From Q2 2009 to Q3 2012, house prices increased by another 24% (17% inflation-adjusted), despite government efforts to cool the housing market.
  • From Q4 2012 to Q4 2015, tighter mortgage rules implemented in July 2012 helped calm the market, but house prices still rose by around 15.7% (10.8% inflation-adjusted).
  • From 2016 to 2020, house prices surged by almost 40% (28.7% inflation-adjusted).
  • During 2021, house prices surged by 15.64% (10.34% inflation-adjusted).
  • House price growth slowed sharply to just 2.5% in 2022, and declined by 3.59% when adjusted for inflation.
  • During 2023, house price growth remained modest at 2.91%, but declined slightly by 0.47% in real terms.

Canada House Price Index graph

Housing market outlook improving

Canada’s housing market is expected to improve this year, as the central bank is projected to have its first rate cut in the second half of this year.

“Many Canadian housing markets have been quiet since the Bank of Canada’s summer rate hikes last year. Interest rates have been the major factor affecting markets over the last few years, and this is expected to continue to be the case in 2024 and 2025,” said CREA in its April 2024 Quarterly Forecasts. “Expectations around the timing of the first rate cut in 2024 seem to have solidified to the second half of the year, and financial markets are currently pricing in about 50 basis points of cuts by the end of 2024.”

The national average house price is forecast to increase by 4.9% y-o-y to CA$ 710,468 (US$514,851) during 2024. This is supported by a projected increase in the number of residential property transactions by 10.5% y-o-y to 492,083 units this year.


  • Alberta is expected to post the biggest annual growth in house prices of 7% during 2024, to an average of CA$ 479,765 (US$347,668).
  • House prices are also projected to increase by 6.9% in British Columbia, and will remain the most expensive housing market in Canada, with an average price of CA$ 1,037,382 (US$751,753).
  • House prices are also expected to increase in Nova Scotia (6.7%), Quebec (5.9%), Newfoundland (5.2%), New Brunswick (5%), and Manitoba (4%).
  • Modest to minimal house price increases are projected to be seen in Prince Edward Island (2.5%), Ontario (2.4%), and Saskatchewan (2.1%).

Home sales remain weak

During 2023, the total number of residential property sales transactions fell by 11.2% y-o-y to 445,514 units, following a huge decline of 25.1% in 2022, according to figures from CREA. This was in sharp contrast to annual increases of 20.9% in 2021, 12.4% in 2020, and 6.5% in 2019.

All regions saw a decline in demand last year. Nova Scotia registered the biggest y-o-y fall of 17.3% in 2023, followed by Newfoundland (-15.1%), New Brunswick (-13.6%), Quebec (-12.8%), Ontario (-12.4%), and Manitoba (-10%). Sales also fell in British Columbia (-9.2%), Alberta (-9.1%), Prince Edward Island (-5.4%), and Saskatchewan (-3.3%).

CREA projects sales activity to increase by 10.5% y-o-y to 492,083 units this year and by another 7.8% to 530,484 units in 2025.

However, actual figures show that activity remains more or less steady. In March 2024, actual sales activity increased slightly by 1.7% as compared to the same month last year.

“While there are expectations the Canadian housing market will pick up on some level this year, home sales and prices were mostly unchanged on a month-over-month basis in March 2024,” said CREA.

“We’ll have to wait for the April data to really understand how buyers are responding to all these new properties for sale, but if you look at last spring as a guide and add to that record population growth in the last year and a central bank that is far more likely to cut this summer than raise like it did last year, it could get interesting,” said Shaun Cathcart, CREA’s Senior Economist. “Will the story be high-interest rates keeping a lot of people on the sidelines this year, or the much expected and anticipated first rate cuts enticing a lot of people back into the market? Probably a bit of both.”

Canada Number of Residential Property Sales graph

New listings continue to fall

The total number of newly listed homes fell by 1.6% in March 2024 from the previous month, according to CREA.

As a result, the national sales-to-new listings ratio tightened to 57.4% in March 2024, as compared to the long-term average ratio of 55%. A sales-to-new listings ratio between 45% and 65% is generally consistent with balanced housing market conditions, with readings above and below this range indicating sellers and buyers’ markets respectively.

There were 3.8 months of inventory in March 2024, unchanged from the previous month but down from 4.2 months of inventory by the end of 2023. The long-term average is about 5 months of inventory.

Residential construction activity slowing

During 2023, the total number of dwelling starts in Canada (Centres 10K+ population and over) fell by 7% y-o-y to 223,513 units, following a 1.5% decline in 2022, according to data released by the CMHC. Yet it remains one of the highest dwelling starts recorded in recent history.

“Following record and near-record highs in 2021 and 2022, housing starts dipped in 2023, but still significantly outperformed expectations for the year. The decline was driven mainly by a sharp drop-off in single-detached starts and tighter economic conditions affecting multi-unit starts in the year’s final quarter,” said Bob Dugan, CMHC’s Chief Economist.

“The recent monthly multi-unit volatility is not surprising as we’re now starting to see 2023’s challenging borrowing conditions and labor shortages in the housing starts numbers and we expect to see continued downward pressure in the coming months,” Dugan added.

By property type:

  • Apartments: starts were up by a modest 4.7% to 150,988 units in 2023 as compared to a year earlier, after increasing by 1.7% in 2022
  • Single-family homes: starts fell by 5.1% y-o-y to 54,616 units last year, following a contraction of 9.3% in 2022
  • Semi-detached houses: starts were down by 8.5% y-o-y to 9,440 units in 2023, after falling by 11.2% in the prior year
  • Row houses: starts fell by 11.7% y-o-y to 25,223 units last year, in contrast to an annual increase of 4.5% in 2022

Ontario accounted for more than 37% of all dwelling starts in Canada during 2023, followed by British Columbia, which represented about 21% share, Quebec with 16.2% share, and Alberta with 15% share.

Likewise, dwelling completions in Canada (Centres 10K+ population and over) fell by 4.3% to 188,689 units in 2023 from a year ago, following a decline of 2.6% in 2022.

By property type:

  • Apartments: completions increased 1.6% y-o-y to 113,196 units last year, after declining by 1.3% in 2022
  • Single-family homes: completions plunged by 18.3% to 43,967 units in 2023 from a year earlier, following an annual fall of 3% in 2022
  • Semi-detached houses: completions fell sharply by 20.9% y-o-y to 7,906 units in 2023, after declining by 7.1% in the prior year
  • Row houses: completions were up by 7.7% y-o-y to 23,620 units in 2023, in contrast to a fall of 5.9% in 2022

Canada Dwelling Starts and Completions graph

Interest rates rising rapidly

Mortgage interest rates are rising rapidly in Canada, following the central bank’s successive rate hikes in the past two years or so.

  • Interest rates on 1-year mortgages stood at 7.84% by the end of March 2024, up from 6.29% in the previous year and 2.99% two years ago, according to figures from Bank of Canada.
  • Interest rates on 3-year mortgages averaged 6.99% in March 2024, higher than the 6.14% in March 2023 and 3.69% in March 2022.
  • Interest rates on 5-year mortgages averaged 6.84% in March 2024, up from 6.49% a year earlier and 4.79% two years ago.

In April 2024, the Bank of Canada held its key interest rate unchanged at 5%, following ten consecutive rate hikes since March 2022 when the key rate was just 0.25%, to curb high inflation. The central bank also kept its bank rate and deposit rate unchanged, at 5.25% and 5%, respectively. Additionally, the central bank said that it is continuing its policy of quantitative tightening.

“Based on the outlook, Governing Council decided to hold the policy rate at 5% and to continue to normalize the Bank’s balance sheet. While inflation is still too high and risks remain, CPI and core inflation have eased further in recent months. The Council will be looking for evidence that this downward momentum is sustained,” said the central bank.

“The Bank remains resolute in its commitment to restoring price stability for Canadians,” the bank added.

Canada Interest Rates graph

Mortgage market growth slowing

As a result, the mortgage market continues to expand, albeit at a slower pace. In February 2024, the total amount of outstanding residential mortgage loans rose by a modest 3.4% to CA$ 2.16 trillion (US$1.57 trillion) as compared to the same period last year, according to figures from Statistics Canada. This followed annual increases of 7.2% in 2023, 10.6% in 2022, and 7.4% in 2021.

The size of the mortgage market expanded strongly in recent years, rising from 39.7% of GDP in 2000, to 54.1% of GDP in 2008, to 63.1% of GDP in 2014, and finally to a peak of nearly 80% of GDP in 2020. The size of the market fell back to about 77.5% of GDP in 2021 and to 75.9% of GDP in 2023.

In 2019, the government launched its First-Time Home Buyer Incentive which aims at helping first-time homebuyers reduce their monthly mortgage payments without adding to their financial burdens. Under the CA$ 1.25 billion (US$ 0.91 billion) shared equity program, the government contributes a portion of the home purchase price in exchange for an equity share of the home’s value.

However due to low uptake since its inception, the CMHC announced recently that the First-Time Home Buyer Incentive is no longer accepting applications and will be discontinued. Accordingly, no new approvals will be granted after March 31, 2024.