The Teranet-National Bank composite index decreased by 0.1% for a second consecutive month in February. This decline in prices comes at a time when the resale housing market has slowed sharply in recent months, due in part to uncertainty surrounding trade tensions with the United States. Consumer confidence is in free fall and the most recent data on their willingness to make major purchases (such as a property) indicate that the slowdown could continue. On a year-on-year basis, the increase in home prices is now limited to just 2.9%, with notable regional differences. Indeed, it is interesting to note that the highest price increases have been observed in the most affordable markets in the country, while the most expensive markets are at the bottom of the list. Unless the current trade war is resolved quickly, home prices are expected to remain under pressure, particularly in the least affordable markets. Although the Bank of Canada’s recent interest rate cuts will provide some support to the real estate market, the inflation situation makes additional support increasingly uncertain, at least in the short term. This, combined with a significant moderation in population growth in a context of a less vigorous labour market than previously thought, represents a headwind for real estate asset prices in Canada.

March 2025