Will Canadian Home Prices Drop in 2025? What Buyers and Sellers Need to Know
- Konstantin Shaburov
- Sep 14, 2025
- 3 min read
Updated: Oct 17, 2025
Introduction
The Canadian housing market has been under heavy pressure in 2025. With months of cooling sales, affordability challenges, still-high interest rates, and inventory beginning to loosen in certain regions, many are asking: will home prices fall this year? For buyers, sellers, and anyone thinking of jumping in or out of real estate, understanding what’s ahead is crucial. In this post, we’ll unpack current forecasts, what’s pushing prices down (or holding them up), regional differences, and practical advice depending on whether you’re buying or selling.
Key Drivers: Why Prices Are Under Pressure
Here are the main forces that are driving (or could drive) price declines in 2025:
Interest Rates & Mortgage Costs. Even if the Bank of Canada cuts its policy rate moderately, mortgage rates remain relatively high. Higher borrowing costs reduce affordability, pushing some prospective buyers out.
Affordability Struggles. Many buyers are priced out, especially in expensive markets (Toronto, Vancouver). This reduces demand. Also, monthly payments are tight for those renewing mortgages under higher rate regimes.
Inventory & New Builds. In markets like Ontario and British Columbia, unsold inventory is growing (especially condos). Builders are delaying or cancelling some projects due to high labour & materials costs.
Economic Uncertainty & Employment. Trade tensions, slower GDP growth, and risk of job losses or weak wage growth make buyers more cautious. Confidence matters.
Population Growth & Immigration Levels. These remain broadly supportive of housing demand, especially in cities. But slower immigration or delays in settlement can reduce demand pressure.
Government Policy & Regulation. Rules around mortgages, foreign buyers, zoning, and building permits all affect supply and demand. New regulation or stricter requirements can dampen demand or slow supply.
What Buyers Should Do
If you’re a buyer (first-time or moving up), here are strategies to take advantage of a cooling or dropping market:
Be ready to negotiate — Sellers may be more motivated in certain markets.
Watch interest rate policy — Even small cuts from the Bank of Canada could open better mortgage rates, so timing matters.
Focus on essentials over style — Target properties that have must-haves (good location, schools, transit) rather than premium features that cost more.
Lock in rates smartly — If you find decent rates, consider locking in to avoid future increases.
Look beyond the biggest metros — Moving slightly farther from city centres or looking in smaller cities may yield better value.
What Sellers Should Do
If you’re selling in 2025, here’s how you can protect your interests and get the best outcome:
Price realistically — Ask-too-high strategies may lead to your home sitting on the market too long.
Improve curb appeal & staging — If inventory rises, buyers have more options: make sure yours stands out.
Consider timing — Selling in seasons when demand is stronger (spring/early summer) may still get you better price.
Be aware of costs — Be ready for buyer demands, inspections, and concessions; staying flexible can pay off.
Understand local condition — In markets with high inventory, such as condos in Ontario & B.C., adjust expectations accordingly.
Will Prices Drop That Much? What Moderates the Downside
While many forecasts call for modest declines (around 1-2% nationally), several factors may limit how far prices fall:
Persistent demand due to immigration, especially in major urban centres.
Supply constraints: delays in construction, regulatory hurdles, rising input costs.
Some buyer segments (investors, high-net-worth) less sensitive to interest rates.
Government interventions (e.g. tax incentives, housing programs) that aim to support affordability.
Conclusion
Yes - home prices in Canada are expected to decline in 2025 overall, but not collapse. The forecasted drop is relatively modest, especially compared to previous overheated years. How much you feel it depends heavily on where you are (province, city, type of home), and timing. For buyers, there are deals to be had if you’re strategic. For sellers, price smart, stage well, and understand your local market.
The 2025 market may be challenging, but with the right guidance, you can make it work for you. Choose the option below that best fits your situation and let’s get started.
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