The Canadian housing market has faced challenges in recent years due to unaffordability issues, making it difficult for many people to become homeowners. However, as 2025 approaches, changes in mortgage rules and lower borrowing costs may present opportunities for prospective buyers. The expansion of insured mortgages and 30-year amortizations, along with an increase in the price cap for insured mortgages to $1.5 million, could make it easier for first-time homebuyers to enter the market. These changes are expected to lead to increased sales and a more robust housing market in the new year.
Experts believe that the new mortgage rules could be a game-changer for buyers, especially in markets like Vancouver where home prices are high. By allowing buyers to put less money down upfront, these rules could make homeownership more accessible to those who may have previously been limited to buying condos. While there are concerns that these changes could drive prices higher, they are still seen as positive for many prospective buyers who have been struggling to enter the market in expensive cities.
Other mortgage changes, such as the easing of the stress test for uninsured mortgages and cuts in the Bank of Canada’s benchmark interest rate, are also expected to impact the housing market in 2025. While fixed mortgage rates may not see much relief, variable interest rates are expected to continue falling. However, overall affordability in the market remains a concern as home prices are still high, even with lower interest rates. The expectation of further interest rate cuts from the Bank of Canada could also affect the competitiveness of the market.
The 2025 housing outlook projects a six percent increase in average home prices, with single-family detached homes expected to see a seven percent rise and condos a 3.5 percent increase. First-time buyers looking for condos may have more options available due to new housing completions in the market. Ottawa’s plans to limit immigration levels could also impact the rental market, potentially putting downward pressure on rents and home prices as landlords may be motivated to sell their units. The overall competitiveness of the housing market could depend on the financial stability of Canadian households and economic prospects in the new year.
While a surge in housing activity is expected in 2025, it is unlikely to be as significant as seen during the early days of the COVID-19 pandemic. Affordability challenges continue to persist, and many households may see higher mortgage rates upon renewal. While a market downturn or boom may not be expected, the housing market could remain relatively flat in the coming years. Despite these challenges, there is optimism among buyers and real estate professionals, with expectations of a busy spring season ahead as more accessible mortgages and improved affordability conditions are expected to drive activity in the housing market.
