Canada’s Housing Market in 2025: Rising Prices, Regional Trends, and Rental Market Pressures

As we look toward 2025, Canada’s housing market is set to enter a period of recovery after the challenges posed by high interest rates in previous years. With more favourable economic conditions on the horizon, renters are anticipating changes in both property values and rental availability. Whether you're considering buying a home or looking to rent, understanding the shifts in regional trends, interest rates, and affordability challenges will be key to navigating the evolving landscape.

The road to 2025

In 2025, Canada’s housing market is expected to recover more consistently after navigating high interest rates in 2024. The Canadian Real Estate Association (CREA) predicts that home sales will rise by 6.2%, fueled by easing interest rates and improving economic conditions. Home prices are forecasted to climb to $729,319, with provinces like Alberta and Saskatchewan leading the way in recovery, according to RE/MAX and RBC.

Interest rates and the rental market in 2025

In 2025, lower interest rates are expected to drive increased home sales, but the rental market will continue to face significant demand. CMHC projects that rental supply will still lag behind demand, resulting in continued pressure on rent prices. Investors may benefit from this sustained rental demand, especially in cities where affordability challenges persist, even as homebuying becomes more accessible.

Average rental prices across Canada in 2024

Looking at 2024, average rental prices across major cities in Canada reflect these pressures in the rental market:

• Vancouver, BC: $3,101/month for a 1-bedroom apartment, one of the highest in Canada.
• Toronto, ON: $2,746/month for a 1-bedroom, reflecting high demand in the Greater Toronto Area.
• Montreal, QC: $2,003/month, with a more affordable market compared to other major cities.
• Calgary, AB: $2,111/month, is quite high, as rental prices rise due to increasing demand.
• Edmonton, AB: $1,579/month, offering a lower-cost alternative in Alberta.
• Winnipeg, MB: $1,646/month, with stable rental prices.
• Saskatoon, SK: $1,344/month, making it one of the more affordable cities in Canada.
• Halifax, NS: $2,373/month, with prices rising rapidly.
• Quebec City, QC: $1,657/month, reflecting more affordable options compared to Montreal.
• Regina, SK: $1,413/month, also among the more affordable cities in the country.

This snapshot of average rental prices in 2024 provides context for the pressures that are expected to continue affecting the rental market in 2025. With rental supply struggling to meet demand, these cities may continue to see upward trends in rent prices throughout the coming year.

Regional trends: A mixed bag

Not all parts of Canada will follow the same trajectory in 2025. Provinces like Alberta and Saskatchewan are expected to experience faster recoveries compared to markets like Ontario and British Columbia. 

Alberta, in particular, is projected to see continued strong home sales, partly driven by its relative affordability compared to other provinces. In contrast, Ontario and British Columbia, with their high price points, will continue to grapple with affordability challenges, although both markets are expected to recover slowly as interest rates decline. 

According to CREA, national home sales are forecast to rise by 7.8% in 2025, with the average price projected to reach $760,120, indicating a steady market recovery as housing supply increases, which benefits renters.

REITs and Affordable Housing in 2025

As Canada’s housing market stabilizes in 2025, Real Estate Investment Trusts (REITs) will continue to play a critical role, especially in addressing the rental sector’s needs. With rental demand projected to outpace supply, investors are increasingly focusing on multifamily and affordable housing projects to meet this demand.

CMHC reports highlight the growing need for affordable rental units, as many potential homebuyers remain in the rental market due to ongoing affordability challenges. By investing in affordable housing, REITs will help bridge the gap between supply and demand while providing a stable income stream for investors, benefiting from the ongoing rental demand surge.

Long-term outlook

Canada’s housing market will continue to face long-term challenges related to affordability and housing supply, even into 2025. The CMHC reports that rental demand will likely outstrip supply, driving rents higher and making affordable housing an ongoing policy focus. 

Population growth, driven by immigration, and slower housing development will add pressure on the housing market. Despite increases in housing starts, the demand for affordable homes and rental units will persist, making affordability a critical concern beyond 2025.

Conclusion

As the Canadian housing market moves through 2025, it’s clear that recovery is on the horizon, albeit with regional differences and continued challenges in affordability. Whether you're looking to buy or rent, it’s important to stay informed and be proactive about understanding the market dynamics. Keep an eye on interest rates, market conditions, and regional differences to make the best decision for your future housing needs.

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