Widespread price growth expected in 2025 as interest rate cuts prompt market rebound

Canadians are looking ahead to 2025 with a positive outlook on the housing market, prompted by a series of interest rate cuts in the latter part of 2024. A new report from ReMax Canada, in fact, forecasts the national average residential price to increase by five per cent, with sales expected to rise in 33 of 37 regions surveyed, some by up to 25 per cent.

2025 outlook

This renewed confidence in the market is notably being felt by first-time homebuyers (seven per cent) according to a Leger surveyed commissioned by ReMax Canada as part of the 2025 Housing Market Outlook Report. ReMax brokers and agents in 81 per cent of regions surveyed noted that first-time homebuyers were the key demographic anticipated to drive market activity in 2025.

“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,” says Christopher Alexander, president of ReMax 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.”

According to the Leger survey, three quarters of Canadians (73 per cent) believe homeownership is the best investment they can make. This sentiment is unchanged year-over- year. Sixty per cent of Canadians currently own a home. Meanwhile, nearly half of Canadians (49 per cent) are confident that homeownership is attainable; and 40 per cent are increasingly becoming more open to settling down in new neighbourhoods to mitigate and manage some of the hurdles surrounding affordability.

Ontario market highlights

As a result of economic conditions impacting markets across the country, Ontario is anticipating average residential sale price increases across the province. Due to low supply and lack of affordable housing, Toronto expects a slight price increase of 0.1 per cent. Prices are expected to increase by two per cent in Niagara; 2.3 per cent in Hamilton; 2.5 per cent in Ottawa; three per cent in Muskoka, and Haliburton; four per cent in Kawartha Lakes; 4.5 per cent in London and Burlington; five per cent in Peterborough, Durham, Kingston and York Region; six per cent in Kitchener-Waterloo, Mississauga, and Brampton; and 10 per cent in Simcoe County.

Ontario is expecting a mix of market types in 2025, as different regions adjust to lower interest rates. Majority of regions (36 per cent) are expected to be balanced markets, including Kitchener-Waterloo, Toronto, Brampton, Mississauga, Durham, Kingston, Ottawa and Sault Ste. Marie. Thirty-one per cent are expected to be sellers’ markets, including Simcoe County and York Region. Meanwhile, Peterborough, Kawartha Lakes, Burlington, Hamilton, Muskoka and Haliburton are expected to be buyers’ markets.

Despite ongoing affordability and inventory challenges across multiple markets, buyer confidence is returning as first-time homebuyers and sidelined buyers in Ontario feel the impact of lower mortgage rates and the new 30-year amortizations. As a result, majority of regions anticipate first-time homebuyers will drive market activity in 2025, with the exception of larger regions in southern Ontario including Toronto, Windsor, York Region and Simcoe County, which predict move-up buyers will drive market activity due to the higher home prices for entry level properties.