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Writer's pictureEmily Sterling
Nov 153 min read

Canada Real Estate Market Outlook 2025



The Canadian real estate market is poised for significant shifts as we approach 2025. A combination of economic recovery, population growth, and evolving buyer preferences is expected to shape the landscape across residential, commercial, and rental sectors. While affordability challenges and interest rate fluctuations remain concerns, the demand for housing and investment opportunities is anticipated to remain robust, particularly in growing metropolitan areas and emerging secondary markets.


 

The Residential Real Estate Market in 2025





Canada’s residential real estate market is expected to see moderate growth, driven by increased immigration, urban development, and a growing preference for suburban living. Major cities like Toronto, Vancouver, and Montreal are likely to remain key hotspots, though affordability pressures may continue to push buyers toward surrounding suburbs and smaller cities.


City

Median Home Price (2022)

Projected Median Price (2025)

Annual Growth Rate (%)

Toronto

$1,140,000

$1,200,000

1.7%

Vancouver

$1,230,000

$1,280,000

1.4%

Montreal

$550,000

$590,000

2.3%

Calgary

$485,000

$525,000

2.7%

Ottawa

$640,000

$680,000

2.0%


Key Residential Trends:


  • Suburban Growth: With housing affordability in urban cores declining, suburban areas around Toronto and Vancouver are becoming increasingly attractive to buyers.

  • Immigration-Driven Demand: Canada’s robust immigration targets are expected to fuel housing demand, particularly in cities with strong job markets and infrastructure.

  • Sustainability in Housing: There’s a growing emphasis on eco-friendly developments, with builders incorporating energy-efficient designs and materials to attract environmentally conscious buyers.


 

The Rental Market: Increasing Demand and Rising Rents



Canada’s rental market is expected to remain strong in 2025, with demand outpacing supply in many regions. Factors like increased immigration, delayed homeownership due to affordability issues, and rising interest rates contribute to a thriving rental sector.


City

Average Rent (2022)

Projected Rent (2025)

Annual Rent Growth (%)

Toronto

$2,475

$2,750

3.6%

Vancouver

$2,600

$2,900

3.7%

Montreal

$1,700

$1,850

2.9%

Calgary

$1,450

$1,600

3.3%

Ottawa

$2,200

$2,400

3.0%


Rental Market Highlights:


  • Urban Centers in Demand: Metropolitan areas like Toronto and Vancouver continue to see high rental demand, especially among young professionals and immigrants.

  • Secondary Markets on the Rise: Cities like Calgary and Halifax are becoming rental hubs due to their relative affordability and increasing job opportunities.

  • Purpose-Built Rentals: Developers are focusing more on purpose-built rental units to meet growing demand, offering long-term rental stability and modern amenities.


 

Commercial Real Estate: Reshaping Workspaces and Retail



The commercial real estate market in Canada is undergoing a transformation, with industrial spaces and mixed-use developments emerging as top-performing asset classes. Retail and office spaces are rebounding, though hybrid work models and e-commerce growth are driving changes in these sectors.


Property Type

Average Lease Rate (2022)

Projected Lease Rate (2025)

Vacancy Rate (2025)

Office

$23/sq. ft.

$25/sq. ft.

14.5%

Retail

$35/sq. ft.

$38/sq. ft.

9.2%

Industrial

$12/sq. ft.

$14/sq. ft.

5.8%


Key Trends in Commercial Real Estate:


  • Industrial Boom: Industrial properties, particularly warehouses and logistics centers, are experiencing strong demand due to e-commerce growth.

  • Hybrid Workspaces: Office spaces are adapting to hybrid work models, with more emphasis on flexible layouts and collaborative environments.

  • Retail Transformation: Brick-and-mortar stores are focusing on experiential retail, blending in-store shopping with digital engagement to attract consumers.


 

Investment Opportunities in Canadian Real Estate


Canada remains a stable and attractive market for real estate investors, with opportunities across residential, rental, and commercial sectors. Emerging cities and secondary markets are becoming increasingly appealing due to their lower entry costs and growth potential.


Investment Type

Average ROI (2022)

Projected ROI (2025)

Single-Family Homes

4.5%

4.8%

Multifamily Properties

5.7%

6.1%

Industrial Properties

7.2%

7.8%

Retail Properties

4.0%

4.5%


 

Challenges Facing the Market in 2025

While the outlook for Canadian real estate is generally positive, several challenges persist:


  • Affordability Issues: High property prices in major cities continue to limit access for first-time buyers.


  • Supply Constraints: Housing shortages, especially in urban areas, exacerbate affordability problems and drive up rental prices.


  • Economic Uncertainty: Inflation and fluctuating interest rates could impact buyer confidence and borrowing capacity.


 

Final Thoughts


Canada’s real estate market in 2025 is expected to remain resilient, with opportunities across residential, rental, and commercial sectors. Key cities like Toronto, Vancouver, and Montreal will continue to drive growth, while secondary markets like Calgary and Halifax present new opportunities for buyers and investors alike. However, affordability and supply challenges highlight the need for balanced growth and policy interventions.


 

Sources



Commenti

London Real Estate Institute

TM

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