Canadian real estate didn’t finish 2025 with a bang, which would have been as surprising as it would have been welcome!
For owners and buyers, it’s been a helter-skelter 12 months marked by American tariffs on core industries and the uncertainty of job security and the future in general.
In this scenario, cities such as Toronto and Ottawa have seen their markets readjust values downwards after the historic spikes achieved in the post-Covid period. Other Canadian centres with a balance between supply and demand have actually prospered.
The small 0.6% decline in the number of homes that were sold on a month-over-month basis in November was predictable and signalled at least a semblance of continued stability.
Deal sizes came in 0.4% lower than in the previous month of October, indicating that Canadians were offering discounts to get their sales over the line.
Prices were 2% below the levels achieved in November, 2024.
The latest data from the Canadian Real Estate Association (CREA) says sales have been relatively steady since July, but they remain 10.7% below the volume we saw in 2024.
And that’s despite nine interest rate cuts over 18 months. The Bank of Canada has now reduced the cash rate from a high of 5% to 2.25%.
CREA speculated that the fact the BoC had signalled there were probably no more cuts in the foreseeable future meant Canadian buyers had decided to take a wait-and-see approach to the last weeks of 2025.
Shaun Cathcart, CREA’s Senior Economist, said: “It’s looking like the mid-year rally in housing demand has veered into more of a holding pattern heading into 2026.
“The Bank of Canada’s clear signal that rates are now about as good as they’re going to get is the green light many fixed-rate borrowers have no doubt been waiting for. We remain of the view that activity will continue to pick up next year.”
The CREA Chair, Valérie Paquin, added that 2025 was expected to be the year that housing markets came out of their “interest-rate-induced hibernation”.
“The rug was pulled out from under that recovery by the economic shock of US tariffs,” she said. “With interest rates now even lower as a result of a softer economy, the focus shifts to the spring of 2026, and whether we’ll finally see the return of more normal levels of housing activity.”