Market insights from Phil Soper, President and CEO of Royal LePage, presented at the 2025 Royal LePage National Web Kickoff

The Canadian real estate market is poised for an active year in 2025, with several key factors affecting buyers, sellers, investors, and renters. Here’s what you need to know about the current market conditions and expectations for the year ahead.

Interest Rates and Affordability

Good news for homebuyers: The Bank of Canada has begun reducing interest rates, with several more cuts expected in 2025. Key points:

• The central bank is shifting focus from fighting inflation to supporting the economy
• Mortgage costs have fallen for 16 consecutive months
• Interest rates are expected to approach 2% by year-end
• Overall cost of homeownership is steadily declining
• Mortgage reforms have improved accessibility:
• 30-year amortization periods have returned for insured mortgages
• Higher insured mortgage limits help buyers in mid-priced markets
• Down payment requirements have decreased significantly for homes between $1-1.5M

Price Expectations

The national housing market is expected to show healthy growth in 2025:

• Forecast of 6% average price appreciation nationally
• This aligns with historical long-term appreciation rates of 5-6%
• Growth expectations vary by region
• Market is returning to more normal conditions after post-pandemic adjustments

Market Stability

Several factors indicate strong market fundamentals:

• Canadian mortgage delinquency rates remain extremely low (under 0.21%)
• Household savings rates have increased to 7% (historically around 2%)
• Employment numbers are strong, with 91,000 new jobs added in December 2024
• Debt-to-income ratios are improving as wages grow faster than housing costs

Immigration and Population Growth

While immigration targets have been adjusted:

• Canada remains a leader in successful economic immigration
• Immigrant homeownership rates exceed native-born rates after 7 years
• Population growth continues to support housing demand
• Strategic immigration policies help address labor shortages and aging population challenges

Investment Considerations

For real estate investors and landlords:

• 11% of Canadians (4 million) currently own investment properties
• 26% of Canadians aim to own investment property by 2028
• Rental markets remain strong with high demand
• Rent increases expected to moderate as mortgage costs decline
• $1 trillion in intergenerational wealth transfer expected over the next generation

First-Time Buyers

The market is becoming more accessible for first-time buyers:

• 31% of first-time buyers receive family help with down payments (up from 20% in 2015)
• New mortgage rules improve affordability
• First-time buyers could represent up to 40% of transactions in 2025
• Millennial buyers showing strong financial positions relative to previous generations

Looking Ahead

The Canadian real estate market is expected to see a coast-to-coast lift in 2025. Key factors supporting this outlook include:

• Stabilizing interest rates
• Strong employment numbers
• Improved affordability measures
• Steady population growth
• Robust savings rates
• Increasing intergenerational wealth transfers

Whether you’re looking to buy, sell, invest, or rent, understanding these market conditions can help you make informed real estate decisions in 2025. Consider consulting with a real estate professional to understand how these factors specifically affect your local market and personal situation.

This market analysis is based on the comprehensive national market update presented by Phil Soper, President and CEO of Royal LePage, during the company’s 2025 National Kickoff event. Royal LePage is Canada’s largest real estate company, with over 20,000 real estate professionals across the country.

– Kai T.