Will the real estate market rebound in the GTA and Canada in 2025?

Experts are weighing in on what to expect in the real estate market for 2025.

Across Canada, home prices are forecast to increase in the first half of 2025 followed by more moderate increases in the latter half of the year, real estate brokerage Royal LePage said in its forecast.

The aggregate price of a home in Canada will increase by six per cent in the fourth quarter of 2025, compared to the same quarter in 2024, the brokerage predicted.

Aggregate prices are calculated using a weighted average of the median values of all housing types collected.

Royal LePage is forecasting that the aggregate price of a home in the Greater Toronto Area will increase by five per cent in the fourth quarter of 2025, compared to the same quarter last year.

This is similar to predictions from other experts.

Real estate brokerage Zoocasa recently suggested that housing demand will pick up and the average time homes spend on the market is expected to decrease, reflecting a potential uptick in buyer activity and a more competitive market in 2025.

The Toronto Regional Real Estate Board also predicted a modest upswing.

“All else being equal, further rate cuts in 2025 and home prices remaining below their historic peaks should result in improved market conditions over the next 12 months,” said the Toronto Regional Real Estate Board president Elechia Barry-Sproule in the latest market report.

The aggregate price of a home in the Greater Toronto Area increased 2.3 per cent year-over-year to $1,149,300 in the fourth quarter of 2024, Royal LePage said in its latest report. But decreased slightly by 0.6 per cent compared to the previous quarter.

Broken out by housing type, the median price of a single-family detached home increased 3.9 per cent year over year to $1,427,500 in the fourth quarter of 2024, while the median price of a condominium dipped 0.7 per cent to $714,600 during the same period.

Royal LePage suggests the increases will continue and with lower borrowing costs more buyers may get in the market.

“We saw sales activity begin to pick up at the end of 2024, with more showings and more appointments in certain markets,” said Shawn Zigelstein, broker and leader of Team Zold, Royal LePage Your Community Realty. “This trend should continue well into 2025. All indicators point to better market conditions for buyers, including first-time homebuyers.”

Changes to mortgage regulations, which allow more people to qualify for a mortgage with less than a 20 per cent down payment, will help new buyers, Zigelstein said.

Plenty of homes are available right now.

“There’s enough inventory right now to keep a lid on price gains, and we shouldn’t see the multiple-offer frenzy that characterized peak markets, except on properties that are priced below market value,” he added.

The most popular home type is a townhouse in the GTA due to relative affordability, Zigelstein said. Meanwhile, condominium sales have continued to stagnate, he added.

In Mississauga, condo prices dropped last month. The average price of a condo townhouse was $771,785, down from $797,250 in November, and condo apartments were at $597,315 in December compared to $615,750 the previous month.

A recent report from real estate digital real estate platform Wahi found 80 per cent of existing condos that changed hands across the GTA in December 2024 sold for less than asking. This does not include pre-construction units.

Across Canada, the aggregate price of a home increased by 3.8 per cent year over year to $819,600 in the fourth quarter of 2024.

The national median price of a single-family detached home increased by 4.9 per cent year over year to $855,900, while the median price of a condominium increased by 1.5 per cent year over year to $592,700.

Royal LePage predicts home prices across Canada will trend modestly upward in 2025 as inventory is absorbed. There should be more balanced market compared to the frenzied conditions of 2021 and 2022.

“There are several converging factors revitalizing Canada’s real estate market and making home ownership more attainable,” said Phil Soper, president and CEO, Royal LePage. “Interest rates have fallen sharply in recent months, with further reductions expected in 2025. We believe the Bank of Canada could lower rates by another 100 basis points by year end, steadily improving affordability.”

There are other factors to consider.

While there may be uncertainty with the new Trump administration in the U.S., residential real estate remains largely insulated from such external pressures in the short term, Royal LePage noted.

“Canada’s housing market is fundamentally driven by domestic factors. With strong full-time job growth, improving housing supply in key markets, and more accessible financing, we expect healthy activity levels to persist, even as broader economic challenges unfold,” said Soper.

An early federal election has become all but certain following the resignation of Prime Minister Justin Trudeau and the prorogation of government.

“With a federal election campaign at home and an aggressive stance on trade expected from the new U.S. administration, Canadians will be understandably nervous,” said Soper “That said, the critical need for housing in Canada transcends political cycles. The next government must prioritize addressing the supply crisis, which affects millions of Canadians seeking affordable shelter and stability for their families.”

See more from Royal LePage here.