Significant challenges confront our country in 2025 with a change of leadership, continuing economic turbulence and a different style of engagement with the US.
Among the concerns of many people is how this will affect the Canadian real estate market and their ambitions to buy their first home, upgrade to a bigger property or downsize with sufficient upside to enjoy retirement.
The latest headline inflation number of 1.8% has sparked further speculation the Bank of Canada might consider a fourth rate cut, dropping 0.25% to 3%.
In 2023, the bank held the rate at 5% for almost a year to quell the post-Covid spike in inflation. That job seems to be well and truly done.
Predictions from the usually conservative Canadian Real Estate Association (CREA) suggests we will enjoy a more vibrant housing market this year.
In fact, we should prepare for a super-busy spring selling season.
We’ll see more homes for sale and lower borrowing costs, which could result in property prices rising an average 4.7% in 2025. The average sale price may hit $722,221 this year, says the CREA.
This rise in fortunes for owners will not be uniform across all provinces or cities. According to the CREA’s senior economist, Shaun Cathcart, the big winners are expected to be British Columbia and Ontario, which already have the most expensive homes.
However, the story is not going to be simple. Despite the overall positive outlook, some markets face challenges. For example, Toronto has a lot of unsold homes currently, and it will take months for that inventory to tighten before it will see prices rise, the CREA says.
A brighter 2025 will be welcomed by buyers and sellers. Transactions fell 5.8% month-on-month in December.
The CREA says that affordability is improving. However, it also cautions that policy vigilance is required because the market remains challenging. Values of houses, apartments and condos had remained consistently high despite the period of high interest rates and rising unemployment.