Rate cut hopes could have ‘psychological’ impact on homebuyers in 2025
Canadian real estate watchers are expecting home prices and housing activity to rise in 2025 after a “recovery year,” but the Bank of Canada’s policy rate will still have sway over how quickly buyers come back.
Royal LePage released its 2025 housing outlook on Thursday, forecasting the aggregate price of a home in Canada will hit $856,692 in the fourth quarter of next year, a 6.0-per cent year-over-year hike.
For the single-family detached market, prices are expected to rise 7.0 per cent annually to just over $900,000. Condos meanwhile are forecast to increase 3.5 per cent year-over-year to $605,993.
More affordable housing markets are expected to see the most sizeable gains next year, led by Quebec City (up 11 per cent), Edmonton and Regina (both up nine per cent). Montreal is forecast for 6.5-per cent growth, outpacing the metropolises of the greater Toronto (up 5.0 per cent) and Vancouver (up 4.0 per cent) areas.
Royal LePage CEO Phil Soper told Global News that 2024 was a “recovery year” for Canada’s housing market, and conditions are now ripe for normalized growth in sales activity and home values come 2025.
Reflecting back on the brokerage’s 2024 predictions, Soper said Royal LePage was right when it came to the economy avoiding a recession and that home prices would not drop across the board.
“Where we did not hit the mark was on the pace of recovery,” he said.
The disconnect, from Soper’s point of view, is in how Canadians reacted to the start of rate cuts from the central bank midway through 2024.
The Bank of Canada’s policy rate now stands at 3.75 per cent after 1.25 percentage points of easing since June. The benchmark rate broadly sets the cost of borrowing in Canada and is a key input in lending rates
Read more on globalnews.ca
