Prices in Canada's housing market on the way up again
Canada’s housing market demonstrated signs of recovery in the final quarter of 2024, bolstered by decreasing interest rates, revised mortgage policies, and rising consumer confidence. According to Royal LePage’s Q4 2024 House Price Survey, the national aggregate home price increased by 3.8% year-over-year to $819,600. Quarter-over-quarter, prices rose slightly by 0.5%, reflecting a steady resurgence in market activity.
“There are several converging factors revitalizing Canada’s real estate market and making home ownership more attainable,” said Phil Soper, Royal LePage’s president and CEO. “Interest rates have fallen sharply in recent months, with further reductions expected in 2025. We believe the Bank of Canada could lower rates by another 100 basis points by year end, steadily improving affordability. At the same time, new mortgage rules are already helping younger Canadians by increasing borrowing power and reducing monthly carrying costs.”
Regional trends and key markets
Quebec City led the nation in price growth, with an 11.3% year-over-year increase in the aggregate home price, reaching $400,600.
The Greater Montreal Area saw robust activity, with an 8.2% annual rise in prices to $613,300, driven by strong demand in entry-level and downsizer markets.
Modest gains were observed in Greater Toronto (+2.3%, $1,149,300) and Greater Vancouver (+0.7%, $1,229,000), while Calgary and Edmonton reported annual price increases of 3.8% and 7.2%, respectively.
Despite these increases, affordability challenges remain. In expensive markets like Toronto and Vancouver, median prices for single-family detached homes now exceed $1.4 million, posing barriers for many buyers.
Policy and economic impacts
Revised mortgage regulations implemented in late 2024 aim to expand accessibility. Key changes include:
Extending eligibility for 30-year amortizations on insured mortgages to all first-time buyers.
Raising the mortgage insurance cap from $1 million to $1.5 million, enabling greater flexibility in high-priced markets.
Additionally, the removal of the stress test for uninsured borrowers switching lenders offers improved refinancing options.
Market outlook
Looking ahead, political uncertainty stemming from an impending federal election could influence market dynamics, Royal LePage noted. This includes the impact of the resignation of Prime Minister Justin Trudeau and the prorogation of Parliament on housing policy.
“With a federal election campaign at home and an aggressive stance on trade expected from the new US administration, Canadians will be understandably nervous. That said, the critical need for housing in Canada transcends political cycles. The next government must prioritize addressing the supply crisis, which affects millions of Canadians seeking affordable shelter and stability for their families,” noted Soper.
Royal LePage projects a 6.0% increase in the national aggregate home price by the fourth quarter of 2025. Early indicators suggest that 2025 could see heightened activity in the spring, driven by continued rate cuts and a stabilized economic outlook. While prices are expected to rise moderately, the market remains poised for balanced growth, with conditions favouring both buyers and sellers.
Source CMP
By Jonalyn Cueto
