Canada’s housing landscape in 2025 showcased stark regional disparities, with notable price declines in Ontario and British Columbia overshadowing gains in other provinces. This trend underscores the growing significance of affordability in homebuying decisions, ultimately pushing national indicators into negative territory. By December, the average home price saw a year-on-year dip of 0.5 per cent, while MLS benchmark prices plunged by 4 per cent. Sales activity also waned, with only 470,314 homes changing hands—marking the third-lowest annual total since 2013.
Regional Trends in the Housing Market
The real estate performance throughout the year can be succinctly characterised by contrasting trends: while Ontario and British Columbia faced price declines, Quebec emerged as a regional powerhouse, and Alberta’s market cooled after an initially strong performance. Other provinces recorded an upward trajectory in either average or MLS benchmark prices.
These regional variations are indicative of a broader shift in housing demand, primarily driven by waning speculative investments and persistent affordability challenges. As investor interest diminished, affordability has taken centre stage in the housing market. Elevated borrowing costs and stretched household budgets have compelled many first-time buyers to consider regions and price points that are more financially accessible. This reality has led to Ontario and British Columbia, which previously saw significant speculative demand, now spearheading a national price correction.
Price Movements in Ontario and British Columbia
Ontario’s housing prices continued their downward trend in 2025, with average home prices dropping by 4 per cent and benchmark prices decreasing by 5.6 per cent. The Greater Toronto Area (GTA) specifically witnessed a decline of approximately 6 per cent, reverting to levels not seen since early 2021. The most substantial reductions occurred in the northern GTA, where median prices in cities like Brampton, Vaughan, Markham, and Richmond Hill plummeted by over 10 per cent.
British Columbia experienced even sharper declines, with average prices falling by 5.6 per cent and benchmark prices decreasing by 6.4 per cent. Vancouver’s market was particularly affected, recording nine consecutive months of benchmark price reductions.
Quebec’s Robust Performance and Alberta’s Uneven Cooling
In stark contrast, Quebec stood out as the strongest market in the country. The province reported an 8 per cent increase in average prices and a 7.1 per cent rise in benchmark prices, with the Greater Montreal area witnessing an impressive 8.7 per cent surge.
Alberta’s market exhibited uneven trends in 2025; while Calgary’s average prices remained stagnant, Edmonton’s prices increased by 4.5 per cent, reflecting underlying affordability disparities within the province.
Meanwhile, less populated provinces, including Manitoba, Nova Scotia, Saskatchewan, Newfoundland and Labrador, and New Brunswick, aside from Prince Edward Island, experienced price growth, further emphasising how affordability remains a crucial factor in shaping Canada’s housing market.
Looking Ahead to 2026
As for the outlook for 2026, predicting future trends remains complex. The Royal Bank of Canada anticipates a modest improvement in housing conditions by the end of 2026, while the Toronto-Dominion Bank forecasts a price growth of about 4 per cent. However, any recovery is likely to be fragile and heavily influenced by interest rate fluctuations and economic developments in the United States. Given these factors, it is improbable that Toronto and Vancouver will revert to booming market conditions in the near future, as affordability challenges persist.
Why it Matters
The shifts in Canada’s housing market reflect deeper economic realities that impact not just homebuyers but also the broader economy. As affordability continues to dictate purchasing decisions, regions that adapt to these changes may emerge stronger. Understanding these dynamics is crucial for policymakers, investors, and prospective homeowners alike, as they navigate the complexities of a housing market increasingly defined by regional disparities and economic pressures.
