As of February 4, 2025, Canada’s economic landscape is experiencing significant shifts due to recent policy changes and global economic dynamics.
Interest Rates and Inflation
The Bank of Canada has reduced its benchmark interest rate by 25 basis points to 3%, marking the sixth consecutive rate cut. This decision reflects concerns over potential economic impacts from new U.S. tariffs. The central bank has also adjusted its inflation forecast, projecting a rise to 2.3% in 2025, up from the previous estimate of 2.2%.
Currency Valuation
The Canadian dollar has recently strengthened, reaching a nearly two-week high against the U.S. dollar. This appreciation is partly attributed to the U.S. delaying the immediate implementation of planned trade tariffs.
Trade Relations and Tariffs
In response to new U.S. tariffs, Canada has announced retaliatory measures, imposing 25% levies on a range of U.S. imports. Prime Minister Justin Trudeau emphasized that these actions are necessary to protect Canadian interests and warned of tangible consequences for the U.S.
Real Estate Market Outlook
The Canadian housing market is expected to experience modest growth. The Canadian Real Estate Association forecasts a 4.7% increase in average home prices in 2025, bringing the typical sale price to approximately $722,221 by year’s end. However, this growth is anticipated to vary significantly across different markets.
Economic Projections
The Bank of Canada has revised its economic growth outlook, now anticipating a growth rate of 1.8% in 2025, down from the previously projected 2.1%. This adjustment reflects concerns over potential economic disruptions stemming from ongoing trade conflicts.
In summary, Canada’s economy is navigating a complex environment characterized by shifting interest rates, evolving trade policies, and a cautiously optimistic real estate market. Stakeholders are advised to monitor these developments closely as the year progresses.
The Canadian real estate market is projected to experience moderate growth in both transaction volumes and property prices throughout 2025.
Transaction Volumes
The Canadian Real Estate Association (CREA) forecasts that approximately 532,704 residential properties will be sold via Canadian MLS® Systems in 2025, representing an 8.6% increase from 2024.
Property Prices
Nationally, the average home price is anticipated to rise by 4.7% in 2025, reaching around $722,221.
Regionally, price growth is expected to vary:
- Quebec City: Projected to see the highest increase, with an 11.0% rise in aggregate home prices.
- Greater Montreal Area: Expected to experience a 6.5% increase.
- Greater Toronto Area: Forecasted to have a 5.0% rise.
- Greater Vancouver: Anticipated to see a 4.0% increase.
It’s important to note that while these projections indicate growth, factors such as interest rate fluctuations, housing affordability, politics and regional economic conditions will continue to influence the market dynamics in 2025.
