Canadian home prices are set to climb 5% on average in 2025, with increases reaching as high as 25% in certain areas, according to a new report from RE/MAX Canada.

While the report does not provide a forecast for Quebec, it predicts a more active housing market nationwide, fuelled by interest rate cuts in late 2024. The findings have implications for the condominium sector, which serves as a market entry point for first-time buyers and plays an important role when it comes to seniors downsizing their homes.

According to a Leger survey commissioned by RE/MAX, sales are expected to increase in 33 of the 37 regions covered, further boosting activity in 2025. First-time homebuyers are expected to be a driving force, with 81% of regions reporting them as the primary demographic leading market activity.

“While affordability challenges persist, the sequential interest rate cuts and changes to the mortgage stress test are a much-needed reprieve for those looking to get into the market,” said Christopher Alexander, president of RE/MAX Canada.

“The current environment is more encouraging than it has been in the past few years, especially for first-time homebuyers. However, a boost in sales, coupled with limited inventory, almost always leads to rising prices, which is the trend we’re expecting to see materialize in virtually all Canadian housing markets.”

The Bank of Canada has cut its key interest rate to 3.75% from 5% as a result of reductions made between June and October. An additional cut is expected when the BoC holds its next policy-rate meeting in December.

The RE/MAX report reveals growing confidence among Canadians in the housing market. According to a Leger survey conducted for RE/MAX, 73% of Canadians view home ownership as the best investment they can make, while nearly half (49%) remain confident that home ownership is attainable.

Affordability continues to shape buyer behaviour, with 40% of Canadians increasingly open to moving to new neighbourhoods to mitigate costs. Climate change is also influencing preferences, with 47% prioritizing properties less likely to be impacted by environmental risks—a 14% increase from 2024.

In addition, more Canadians (62%) now believe working with a professional realtor adds value to the buying or selling process, up 5% from 2024.

Across Canada, market conditions vary by region, with Western Canada, Ontario, and Atlantic Canada all anticipating price increases.

In B.C. and on the Prairies, residential prices are forecast to rise by 3% to 10%. The Greater Vancouver Area is expected to see a 7% increase, while Edmonton leads with a projected 10% price jump. Calgary, Vancouver Island, and Winnipeg anticipate more modest gains of 4% to 5%. Sales are also expected to climb, with increases of up to 20% in regions such as Vancouver Island and the Greater Vancouver Area.

Out-of-province buyers, particularly from Ontario and B.C., continue to drive demand in Alberta, where affordability remains a key draw.

Ontario is set to see price increases across the province, with smaller markets like Sudbury, North Bay, and Durham projecting 5% growth, while Simcoe County anticipates a 10% surge. Toronto expects a more modest 0.1% rise due to ongoing affordability challenges.

Market dynamics will vary, with 36% of regions expected to have balanced markets, including Toronto, Ottawa, and Kitchener-Waterloo. Sellers’ markets are anticipated in areas like York Region, Sudbury, and Thunder Bay, while Peterborough and Muskoka are among the regions expecting buyers’ markets.

Lower mortgage rates and longer amortization periods are helping first-time buyers re-enter the market, though higher home prices in Southern Ontario continue to pose challenges.

Home prices in Atlantic Canada are also on the rise, with increases of up to 8% expected in Truro, N.S., and Nova Scotia’s Colchester County, and St. John’s, NL. Halifax is projected to see a 5% price hike; in New Brunswick, Saint John, and Fredericton/Oromocto expect steadier conditions.

First-time homebuyers are likely to drive activity across the region, with single-detached homes remaining the most sought-after property type.

Challenges and Opportunities

Despite renewed optimism, affordability and inventory remain pressing issues.

“A boost in sales, coupled with limited inventory, almost always leads to rising prices,” Alexander explained.

This situation is expected to further tighten the market in 2025, with many regions transitioning to sellers’ markets.

As Canadians look ahead, the combination of lower interest rates, changes to the mortgage stress test, and a strong focus on affordability will shape the housing market in the coming year, RE/MAX predicts. Whether first-time buyers, move-up buyers, or downsizing retirees, all are poised to play a pivotal role in driving market activity.

The findings come after a RE/MAX report published earlier this year showed that report comes sellers are returning to Canada’s condominium markets in large numbers, driven by hopes of future interest-rate cuts enticing cautious buyers back.

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