An Overview of the Current State of the Canadian Housing Market
As trade uncertainty and economic headwinds weigh heavily on consumer confidence, Canada’s housing market is experiencing a notable softening. Sales prices in metropolitan areas are showing decelerating growth, and asking rents are in decline across the country. This landscape provides a complex picture of shifting dynamics influenced by regional variances, policy changes, and broader economic factors.
In this comprehensive analysis, we will delve into various aspects of the Canadian housing market, highlighting recent developments and long-term trends.
Housing Market Snapshot
In April 2025, the Canadian housing market demonstrated further slowdowns under increased uncertainty surrounding U.S. trade policy. According to the Teranet-National Bank House Price Index (tracking single-family home prices across 11 major metropolitan areas), house prices rose by a mere 0.2% year-on-year. This marks a significant deceleration from the previous month’s growth of 2.3%.
Price performance varied across regions. Notable increases were reported in Quebec City (13.4% annual gain), Montreal (6.6%), and Winnipeg (6.5%). In contrast, Toronto (-3.5%), Hamilton (-3.0%), and Vancouver (-0.7%) recorded declines.
Phil Soper, president and CEO of Royal LePage, captured the mixed momentum in the market stating, "Softer sales in Ontario and British Columbia reflect consumer caution amidst economic headwinds. In contrast, markets in Quebec and the Prairies are demonstrating surprising resilience due to falling interest rates and low inventory."
National Home Prices
The Canadian Real Estate Association (CREA) reports that the average home price sold declined by 3.9% year-on-year in April 2025 to CAD 679,866 (approximately USD 486,035). Forecasts predict a further modest decline of 0.3% for the year, but a potential recovery of 1.2% in 2026.
Regional Dynamics
Average Residential Prices by Province
| Province | Average Price (CAD) | YoY Change (%) | 2025 Forecast (%) | 2026 Forecast (%) |
|---|---|---|---|---|
| British Columbia | 946,138 (676,393 USD) | -5.8 | -0.5 | 0.5 |
| Alberta | 524,622 (375,051 USD) | 5.6 | 4.0 | 1.5 |
| Saskatchewan | 360,500 (257,721 USD) | 6.5 | 3.5 | 0.3 |
| Manitoba | 403,587 (288,524 USD) | 5.5 | 3.7 | 2.0 |
| Ontario | 859,645 (614,559 USD) | -4.8 | -0.9 | 0.8 |
| Quebec | 544,895 (389,545 USD) | 8.5 | 2.9 | 1.1 |
| New Brunswick | 325,600 (232,771 USD) | 7.3 | 5.1 | 1.7 |
| Nova Scotia | 430,400 (307,692 USD) | 3.1 | 3.8 | 1.0 |
| Prince Edward Island | 364,600 (260,652 USD) | 0.1 | 3.0 | 0.5 |
| Canada | 679,866 | -3.9 | -0.3 | 1.2 |
(BOC exchange rate as of April 2025: 1 USD = 1.3988 CAD)
Historical Perspective
Historically, the Canadian housing market has shown resilience against significant downturns. The mid-2000s saw a robust growth phase, followed by a contraction during the 2008 financial crisis. The recovery was swift, aided by low interest rates and a conservative banking system. The last few years have witnessed uneven price growth, particularly after the COVID-19 pandemic initiated a demand surge in suburban markets.
Now, with rising interest rates leading to a housing price plateau in major cities like Toronto and Vancouver, we see a divergence wherein cities such as Calgary are enjoying consistent growth, attributed to affordability and demographic trends.
Demand Highlights
Economic Impact on Sales
The CREA reported a 5.97% decline in residential property sales nationwide for the first four months of 2025 compared to the same period in 2024. The uncertainty regarding U.S. trade policies has overshadowed previous forecasts, leading to a significant downgrade in expected home sales for the year.
While provinces like Newfoundland and Labrador, Quebec, and Prince Edward Island forecast sales growth exceeding 7%, areas facing economic uncertainty, such as Ontario and British Columbia, project a downward trend.
Seasonal Adjusted Annual Home Sales
| Province | 2025 Sales (Projected) | YoY Change (%) |
|---|---|---|
| British Columbia | 74,479 | 2.1 |
| Alberta | 83,485 | 9.2 |
| Ontario | 173,482 | 3.0 |
| Quebec | 90,182 | 18.8 |
Note: Data reflects residential property sales figures and projections.
Supply Highlights
Housing Starts
The Canada Mortgage and Housing Corporation (CMHC) noted that national housing starts reached 278,606 units in April 2025, marking a 15.33% increase from April 2024. However, regions such as Ontario and British Columbia reported declines in new construction.
The current rebound indicates a temporary lift in residential investment spending, yet structural supply gaps persist, showcasing the need for additional housing units to meet demand, particularly in metropolitan areas.
New Housing Starts by Province
| Province | Housing Starts (SAAR) | YoY Change (%) |
|---|---|---|
| British Columbia | 53,195 | -2.64 |
| Alberta | 63,358 | 37.78 |
| Ontario | 66,769 | -9.66 |
| Quebec | 59,893 | 52.77 |
| Newfoundland | 2,262 | 34.56 |
| Canada | 278,606 | 15.33 |
Rental Market Trends
Asking Rents in Decline
Since October 2024, asking rents have consistently declined across Canada, with an overall decrease of 2.8% year-on-year as of April 2025. The most significant drops were observed in the houses and townhouses category at -6.8%.
Despite the declines, average asking rents remain considerably higher than pre-pandemic levels. For instance, the average rent for purpose-built rental apartments reached CAD 2,105 (USD 1,505) in April 2025.
Average Asking Rent by Province
| Province | Apr 2025 Rent (CAD) | Apr 2025 Rent (USD) | YoY Change (%) |
|---|---|---|---|
| Alberta | 1,716 | 1,227 | -1.8 |
| British Columbia | 2,483 | 1,775 | -1.0 |
| Ontario | 2,338 | 1,671 | -2.7 |
| Quebec | 1,976 | 1,413 | -1.7 |
| Canada | 2,116 | 1,513 | -1.6 |
Mortgage Market Dynamics
Recent Trends in Mortgage Rates
As of April 2025, the Bank of Canada is maintaining the overnight target rate at 2.75%, a significant drop from previous peaks of 5.00%. The subsequent decline in mortgage rates, particularly for new residential loans, is facilitating a rebound in new mortgage originations.
New Mortgage Interest Rates:
| Type | April 2025 Rate (%) | Year-on-Year Change (%) |
|---|---|---|
| New Mortgages, Insured | 4.63 | ↓ 1.12 |
| New Mortgages, Uninsured | 4.70 | ↓ 1.25 |
This decline in borrowing costs is essential to stimulating demand, even amid economic uncertainties.
Socio-Economic Context
Broader Economic Challenges
Canada’s economy is navigating a complex landscape influenced by global slowdown and domestic policy shifts. Real GDP growth is projected to weaken further, with the OECD anticipating a growth rate of 1.0% in 2025. Consumer price index inflation has also moderated significantly after peaking in 2022.
With immigration driving much of the demand for housing, the need for sustainable policies to manage growth and affordability remains critical.
Conclusion
The Canadian housing market is currently characterized by mixed signals stemming from regional divergences, shifts in consumer confidence, and broader socio-economic pressures. While some regions exhibit resilience, others are grappling with declining prices and slower sales.
As stakeholders from policymakers to home buyers navigate this evolving landscape, adaptability and proactive strategies will be key in addressing the intricate challenges that lie ahead.
Sources:
- Canada Mortgage and Housing Corporation (CMHC)
- Canadian Real Estate Association (CREA)
- Teranet and National Bank of Canada
- Statistics Canada
- Bank of Canada
- International Monetary Fund (IMF)
- Organization for Economic Co-operation and Development (OECD)
