Economic jitters shake up Canada's real estate outlook
A new Royal LePage report has revealed that Canada’s housing market is experiencing a distinct divide, with more affordable regions seeing price growth while the country’s most expensive markets struggle to maintain momentum.
The national aggregate home price rose 2.1% year-over-year to $829,400 in Q1 2025, with a modest quarterly increase of 1.2%. However, this national figure masks significant regional variations.
Greater Montreal Area saw home prices increase by 7.9% compared to last year, while Greater Toronto and Vancouver recorded declines of 2.7% and 0.7%., respectively. Quebec City continues to lead the country with a remarkable 17.0% year-over-year price increase – the highest among major regions for the fourth consecutive quarter.
“Canada’s housing market entered 2025 with mixed momentum,” said Phil Soper, president and CEO of Royal LePage. “In Ontario and British Columbia, softer sales reflect consumer caution in the face of economic headwinds. In contrast, markets in Quebec, the Prairies and Atlantic Canada are demonstrating surprising resilience.”
Economic uncertainty drives diverging trends
The uneven performance appears linked to geopolitical tensions and economic uncertainty, particularly regarding trade relations with the United States. A Royal LePage survey found that 49% of Canadians express confidence in the economy, while 43% do not. Notably, Quebecers are the most optimistic at 65%, while residents of Manitoba and Saskatchewan show the least confidence at 34%.
Among potential homebuyers, nearly half (49%) say the ongoing trade dispute with the US has caused them to postpone their plans. Concerns include potential increases to cost of living (37%), uncertainty about making major purchases during political instability (30%), and expectations that home prices might decline due to the conflict (14%).
“The typical spring market didn’t kick off as energetically as expected, and geopolitical uncertainty is playing a major role,” noted Soper. “The new administration in Washington has rattled Canadians with aggressive rhetoric and punitive trade policy.”
Revised outlook
Royal LePage forecasts that the aggregate price of a home in Canada will increase 5.0% by Q4 2025 compared to the same quarter last year – though this projection has been revised downward to reflect current market conditions.
Regional variations in market performance remain pronounced:
- Edmonton: 8.3% year-over-year price increase to $478,800
- Winnipeg: 5.4% increase to $411,900
- Ottawa: 2.9% increase to $779,400
- Calgary: 2.4% increase to $692,300
- Halifax: 1.9% increase to $517,600
- Regina: 1.2% increase to $384,300
The report suggests that while uncertainty may continue through the upcoming federal election, falling interest rates and strong housing fundamentals are expected to support market recovery as political and economic clarity improves.
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