The Interest Rate Gift Canadians Were Waiting For, and a Rosy Housing Market Outlook for 2025

This week’s top real estate stories.

By  Jared Lindzon | 2 minute read

Every Friday, Wahi brings you the most important real estate stories from the past week.

Don’t Forget to Leave Milk and Cookies for Tiff Macklem

Tiff Macklem just delivered the gift Canadians most wanted to unwrap his holiday season. After checking his list twice and discovering that the economy had been behaving this year,  the Bank of Canada governor gifted Canadians a half-percentage rate cut, just in time for the holidays. The 50-basis point reduction brings the Bank’s key policy rate to 3.25%, down from 5% earlier this year. This holiday miracle will be welcome news to the 1.2 million Canadians up for renewal in 2025, those looking to enter the housing market, and the country’s real estate industry more broadly.

Most Canadians Can’t Handle Housing Cost Increases  

Most Canadians are standing dangerously close to the cliff’s edge when it comes to their mortgage and rent payments. According to a survey by EveryRate.ca, the majority would be forced out of their homes within six months if faced with a housing cost increase of 15% or more. That’s a scary prospect given that 1.2 million mortgages are up for renewal in 2025, according to CMHC, 85% of which were contracted when the Bank of Canada interest rate was at or below 1%. Average rent, meanwhile, has increased by 18.8% in the last three years, according to Rentals.ca. 

Housing Market Goes Back to the Future  

The Canadian housing market’s identity crisis is coming to an end, as it looks to get back in touch with its old self. According to a report by Royal LePage, 2025 will bring a return to long-term market norms, following years of pandemic-related disruptions and wild swings in interest rates, prices and inventory. According to the report, home prices are expected to increase 6% by late next year, to an average of $856,692. Royal LePage credits new lending rules for helping to improve buyer borrowing capacity, such as expanded eligibility for 30-year amortizations and a higher cap on insured mortgages.

The Rents are Falling!  

Just as Sir Isaac Newton predicted, even Canada’s rental market must come down eventually. According to the latest report by Rentals.ca asking rents dropped to a 15-month low in November, falling 1.6% on an annual basis in addition to October’s 1.2% decline. Consistent with recent trends the sharpest declines were found in the country’s most expensive markets, with average rents in Toronto and Vancouver plummeting 9% last month. There were also significant declines in asking rent in Kingston, Kitchener, London, Mississauga, Burlington, Barrie and Hamilton. The biggest increases, meanwhile, were found in Saskatoon, Gatineau, Waterloo and Quebec City.

It’s Still Black Friday in the GTA  

It’s not just TVs, cosmetics and Instant Pots; homes also went on sale this black Friday in most of the GTA. According to our latest data most homes that sold in the region last month went for below asking; even more so than the month prior. Last month 75% of homes sold in the GTA went for below asking, compared with 70% in October. In fact, 91% of GTA neighbourhoods remained in underbidding territory heading into the final month of the year, with six-figure discrepancies in asking and sales prices found in York Mills, King, Eastlake and Vales of Humber. 

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