New single-family houses billed as estate cottages and townhouses under construction in Delta, B.C., in August, 2024. CREA predicts Canada will see 532,704 home sales this year, up 8.6 per cent from 2024.DARRYL DYCK/The Canadian Press
Canada’s national real estate association is forecasting a surge in sales this spring as a deluge of first-time homebuyers enter the market and take advantage of lower interest rates.
After more than two years of lacklustre activity, conditions are primed for first-time homebuyers to make a move, the Canadian Real Estate Association said in its housing outlook released Wednesday.
The cost of a new mortgage is cheaper than it was a year ago and may soon bottom out if the Bank of Canada stops cutting interest rates.
New policies enacted last year also make it easier for first-time homebuyers to make a purchase by allowing them to make a smaller down payment and pay back their loan over a longer period of time.
“Our forecast continues to be for a significant unleashing of demand in the spring of 2025,” CREA senior economist Shaun Cathcart said.
At a news conference to discuss the forecast, Mr. Cathcart pointed out that waves of millennials are eager to buy their first home. In addition, there were record levels of immigration in recent years and some of those new permanent residents have been increasing pressure on the housing market.
CREA predicts Canada will see 532,704 home sales this year, a rise of 8.6 per cent from 2024 when activity started to pick up after the central bank began cutting interest rates in the summer. The Bank of Canada has since reduced its benchmark interest rate five times, to 3.25 per cent from 5 per cent.
The most popular type of mortgage, the five-year fixed rate, is averaging 4.25 per cent, compared with 5.07 per cent a year ago, according to data from Mortgagelogic.news.
However, CREA said there is an expectation the Bank of Canada may soon signal that interest rates are about as low as they are likely to go in this easing cycle. Mr. Cathcart said that would be an important signal to potential buyers to lock in rates. He said buyers are hesitant to buy if they think mortgage rates are going to continue to fall.
CREA predicts a bigger rebound in activity in British Columbia and Ontario, which have both experienced slower sales than other parts of the country. In B.C., sales increased by 2.1 per cent from 2023 to 2024 and in Ontario, sales rose 3.1 per cent year over year.
In contrast, activity in Alberta and Saskatchewan was robust, with sales up about 9 per cent year over year. CREA said the demand for homes in the two provinces would likely not lead to a big jump in transactions in 2025 given the inventory of homes available for sale is near 20-year lows. But the association expects buyer competition to drive up prices.
Mr. Cathcart was dour on the future for the condo market, where demand has waned amid a spike in new condo buildings coming on the market. He said condo owners are having trouble selling because many buyers prefer more spacious types of housing.
CREA predicts the national average home price to rise 4.7 per cent on an annual basis to $722,221 this year.
Apart from the country’s two priciest provinces of British Columbia and Ontario, home values increased last year. In Alberta, the average home price was up 9.6 per cent from 2023 to 2024. In Quebec, the average price increased 7.3 per cent and in Newfoundland and Labrador, it was up by 8.9 per cent.
Ontario’s average home price declined by 0.6 per cent and British Columbia was up by just 1.1 per cent in 2024.
Nationally, there were 490,376 sales last year, up 7.3 per cent from 2023. The average home price was $689,783, a 0.9-per-cent increase over 2023.