Key Takeaways
- Canada’s housing market saw a divergence in 2025, with price declines in Ontario and British Columbia outweighing gains in other provinces.
- Average home prices were down 0.5% year-over-year, while MLS benchmark prices fell 4.0% by December 2025.
- Sales activity was subdued, with 470,314 homes changing hands in 2025, the third-lowest annual total since 2013.
- Affordability constraints and declining speculative demand drove the shift in housing demand, with buyers seeking regions and price points where ownership is within reach.
- Ontario and British Columbia, which experienced high speculative demand in the past, are leading the national price correction.
Introduction to Canada’s Housing Market
Canada’s housing market diverged in 2025 along regional lines, with price declines in Ontario and British Columbia outweighing gains elsewhere, reflecting the growing influence of affordability on where people bought homes. As a result, national indicators slipped into negative territory. By December 2025, average home prices were down 0.5 per cent year-over-year, while MLS benchmark prices fell a steeper 4.0 per cent. Sales activity was also subdued, with 470,314 homes changing hands in 2025 – the third-lowest annual total since 2013. This shift in the market is a significant change from previous years, where speculative demand and high prices dominated the market.
Regional Differences in Housing Performance
Broadly speaking, the year’s real estate performance can be characterized by price declines in Ontario and B.C., a hot market in Quebec and Alberta cooling after a strong start, while all other provinces recorded annual gains in either average or MLS benchmark prices. These regional differences reflect a shift in housing demand, driven by declining speculative demand and persistent affordability constraints. As investor interest has faded, affordability has become the dominant force in the real estate market. High borrowing costs and stretched household incomes have pushed many first-time buyers toward regions and price points where ownership remains within reach. Against this backdrop, it is unsurprising that Ontario and B.C., provinces that experienced the highest levels of speculative demand over the past two decades, are now leading the national price correction.
Provincial Housing Market Performance
Ontario home prices continued their decline in 2025, with average prices falling 4.0 per cent and benchmark prices down 5.6 per cent. Noticeably, the Greater Toronto Area home prices declined about 6 per cent, returning to early 2021 levels. Declines were most pronounced in the northern GTA, where median prices in Brampton, Vaughan, Markham and Richmond Hill fell by more than 10 per cent. B.C. saw even steeper declines, as average prices fell 5.6 per cent and benchmark prices dropped 6.4 per cent, with Vancouver posting nine straight months of benchmark declines. In contrast, Quebec stood out as the country’s strongest market, with provincial average and benchmark prices rising 8.0 per cent and 7.1 per cent, respectively, while average home prices in the Greater Montreal area climbed 8.7 per cent. Alberta’s market cooled unevenly in 2025, as Calgary’s average prices were flat while Edmonton’s rose 4.5 per cent, reflecting existing affordability differences.
Affordability and Regional Variations
Apart from Prince Edward Island, less-populated provinces – including Manitoba, Nova Scotia, Saskatchewan, Newfoundland and Labrador, and New Brunswick – recorded price growth in 2025, once again highlighting the central role affordability continues to play in shaping Canada’s housing market. The variation in housing market performance across provinces reflects the different affordability conditions in each region. Provinces with more affordable housing options, such as Quebec and the less-populated provinces, saw price gains, while provinces with high prices and low affordability, such as Ontario and B.C., saw price declines. This trend is likely to continue, with buyers seeking out regions and price points where ownership is within reach.
Outlook for 2026
So, what will happen in 2026? This is a difficult question to answer. Royal Bank of Canada expects housing conditions to turn modestly positive by the end of 2026, while Toronto-Dominion Bank expects price growth of around 4 per cent. Ultimately, any recovery in 2026 is likely to be fragile and heavily dependent on interest-rate trends and developments south of the border. Against that backdrop, Toronto and Vancouver are unlikely to return to hot-market conditions in the near term, as affordability constraints remain a significant headwind. The housing market is expected to remain sensitive to changes in interest rates and economic conditions, making it challenging to predict with certainty what will happen in 2026.
Conclusion
In conclusion, Canada’s housing market in 2025 was characterized by regional differences, with price declines in Ontario and British Columbia outweighing gains in other provinces. Affordability constraints and declining speculative demand drove the shift in housing demand, with buyers seeking regions and price points where ownership is within reach. The outlook for 2026 is uncertain, with any recovery likely to be fragile and dependent on interest-rate trends and developments south of the border. As the market continues to evolve, it is essential to monitor the trends and conditions that shape the housing market, including affordability, interest rates, and economic conditions.