Canadian housing market returns to stability, prices expected to rise 6% in 20

Canadian housing market returns to  stability, prices  expected to rise 6% in 2025: 

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The Canadian housing market is  expected to experience some stability in 2025 as  low interest rates and new lending rules bring buyers back  into the market, according to Royal  LePage Market Survey  forecasts. The  firm predicts  that the  median home price in Canada will  increase 6% annually to $856,692 in the fourth quarter of 2025, in line with long-term trends.
Single-family homes are expected to see a  7% price increase, reaching a median value of $900,833, while condo prices are  expected to  increase 3.5%, reaching $605,993. "The  number of willing and able buyers continues to  grow and upcoming changes to mortgage lending rules will further  strengthen Canadians' borrowing power,"  said Phil Soper, president and CEO of Royal  LePage.
The Bank of Canada's recent  shift in monetary policy from  "fighting inflation" to  "stimulating the economy" has been a  major driver of this optimism, Soper  said. "We saw a  significant increase in market activity at the start of the fourth quarter, following the Bank of Canada's  50 basis point rate cut," he notes, adding that most  buyers believe home prices have  risen.
Regional price trends will reflect strong  demand
Forecasts call for price  increases in all major Canadian markets, with Quebec City leading the way  with a projected price increase  of 11%. Edmonton and Regina follow with projected gains of  9% each. Meanwhile, Greater Montreal is expected to see a  6% increase, outpacing the  moderate 5% growth in the Greater Toronto  Area and  4% in Metro  Vancouver.
"In recent months, supply has  increased in the Toronto and Vancouver real estate markets as sellers responded to  the first interest rate cuts by listing their homes.  "However, while home prices in these cities  have been high, many  foreclosed buyers  have continued to wait for more  favorable lending terms," says Soper.

"The stability of home prices also reduced the urgency often driven by  the fear of 'missing out,' creating a temporary  impasse where inventory  remained and buyers  were reluctant to act. By mid-fall, this dynamic began to  change as buyers  returned to the  market."
Expanded lending rules should help first-time buyers
New mortgage rules  that take effect  on December 15, 2024, aim to provide  better access to housing for first-time and new  home buyers. These changes include eligibility for 30-year  amortization for insured mortgages and an increase in the mortgage insurance  limit from  $1 million to  $1.5 million. "First-time buyers will be the  biggest beneficiaries of these initiatives, as their ability to borrow more for less with a  lower down payment will help them  get closer to  buying a home  sooner," Soper said. "We believe the return of buyers to the market will encourage builders and trigger a  much-needed new wave of  supply."
Political and Economic Factors
There is  a risk of disruption from political  changes, both domestically and in the  United States. New housing policies following  the federal election in Canada,  as well as the  Trump administration's new trade agenda in the  United States, could have  ramifications for the Canadian real estate market,  Mr. Soper  says.
Outlook for  2025
The strongest quarterly gains are  expected in the first quarter of 2025, driven by an early spring market. National home prices are  expected to increase  2% between the fourth quarter of 2024  and the first quarter of 2025, followed by more moderate gains of  1.5% in the second and third  quarters and  1% in the  third quarter  to end the year. of the  year.
Soper predicts that 2025 will bring a level of  normality: "After several years of unusual volatility in the real estate market,  leading indicators point to a return to stability in  2025."

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