Reports

The Teranet-National Bank composite index fell 0.4% from February to March, marking a third consecutive monthly decline and a sharper contraction than in previous months. This comes at a time when the resale market continues to slow, due in particular to uncertainty surrounding the trade war with the United States. As a result, prices have declined by 0.7% since December 2024, with a more pronounced decline for condominiums (-1.2%) and a slightly less significant decline for other types of housing (-0.3%). Although the real estate market has slowed in all provinces, the magnitude of this decline in activity is particularly noticeable in Ontario and, to a lesser extent, in British Columbia, the two least affordable markets in the country. Furthermore, the weakness in the Ontario housing market is not limited to a few markets, but is a broader issue, as 81% of the CMAs in this province (13 out of 16) covered by our price indices experienced declines from February to March, compared to only 40% for other markets outside Ontario. It should also be noted that more affordable real estate markets are faring better. This is particularly true in Quebec, where the four CMAs covered by our indices are among the top five in the country in terms of annual price growth (Sudbury completing the list), with increases ranging from 9.7% in Montreal to 18.3% in Trois-Rivières compared to March 2024. In a context of ongoing economic uncertainty, moderate population growth and the risk that long-term interest rates will remain higher for longer than expected, home prices are likely to remain under pressure in the coming months.

April 2025

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

After rising steadily by 2.8% over the previous six months, the Teranet-National Bank composite
index remained unchanged in January. This loss of momentum comes at a time when
transactions in the housing resale market declined in December and again in January due to the
uncertainty created by the threat of US tariffs (top graph). In addition, a significant number of
sellers decided to put their property up for sale in January, perhaps in anticipation of a high
season more vigorous than in recent years. This marked increase in new listings, combined with
the decline in sales, shifted real estate market conditions from ‘favourable to sellers’ to balanced
during the month (bottom graph), which could contain price growth in the coming months.
However, we believe that the impact of potential tariffs on the confidence of potential buyers will
dissipate in the coming months, provided that the repercussions on the labour market remain
limited. In addition, the recent interest rate cuts by the Bank of Canada and the increase in the
amortization period to 30 years for first-time buyers should continue to support the market in the
coming months, but persistent affordability difficulties could limit the extent of the recovery in the
most expensive markets.

February 2025

The composite index rose by 0.8% in December, the sixth consecutive monthly increase and a larger rise than the 0.7% recorded the previous month. As a result, prices have grown by a cumulative 2.9% since the Bank of Canada’s first rate cut in June and are now just 0.3% below the record level reached in April 2022. This acceleration in prices comes as the effects of the monetary easing cycle continue to be felt in the housing market. The number of sales on the residential market has picked up and market conditions are still favourable to sellers, encouraging price rises. With the central bank expected to continue its monetary easing in the months ahead, and with the extension of the 30-year amortization period for insured mortgages in December, the housing market could remain buoyant in the months ahead, provided the deterioration in the labour market remains limited. However, given affordability challenges and much slower population growth, the pace of house price appreciation should be moderate.

January 2025

The composite index rose by 0.6% in November, the fifth consecutive monthly increase and a larger rise than the previous month’s 0.4%. As a result, prices have grown by a cumulative 2.2% since the Bank of Canada’s first rate cut in June, but still remain 1.0% below their April 2022 peak. This acceleration in prices comes at a time when the effects of the monetary easing cycle are beginning to be felt more strongly in the housing market. Indeed, the number of transactions on the resale market continued to rise in November after a jump in October, thanks in particular to a reduction in fixed mortgage interest rates since the summer and the accelerating pace of the central bank’s policy rate cuts in its last two announcements. As a result, conditions on the resale market have tightened further in recent months, with a seller’s market synonymous with upward price support. With the central bank expected to continue easing monetary policy over the coming months to return to neutral territory, and with the extension of amortization to 30 years for insured mortgages in December, the real estate market could maintain its momentum in the coming months, provided the deterioration in the labour market remains limited. However, given affordability challenges and much slower population growth, the pace of house price appreciation should be moderate.

December 2024