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Falling interest rates and federal changes to mortgage rules could unlock “a flood” of activity in Canada’s real estate market, a new report has forecast.
TD Economics recently released its Canadian Housing Outlook, suggesting that despite a decline in mortgage rates in recent months, many prospective buyers remain on the sidelines. It added that many are waiting for the Bank of Canada to cut its overnight interest rate even more, likely leading to even lower cost mortgages.
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At the same time, the recent change by the federal government to allow 30-year amortization mortgages for first-time buyers on resale homes, not just new homes, will come into effect in December. As a result, many of these buyers are likely going to put off making a purchase this fall.
Both factors point to a rebound in activity early in 2025. The report further predicted that Canadian home resales should increase nearly eight per cent in the first quarter of next year versus the last three months of 2024. What’s more, the second quarter could see sales grow another four-plus per cent from the first three months of 2025.
At the same time, prices are forecast to grow nearly three per cent quarter over quarter in the first three months of 2025, and another two per cent in the second quarter. For the remainder of the year, TD estimated that prices and sales will be slightly positive or flat, quarter over quarter.
Much of the surge in demand, it added, will be from pent-up demand from the past two years as many buyers grappled with higher mortgage costs.
Alberta is expected to be among the provincial leaders for price and sales growth next year. TD predicted that sales would rise 8.5 per cent year over year, and prices will gain seven per cent. That’s the highest forecast price increase among the provinces.
Ontario and British Columbia are expected to lead sales growth, both at about 23 per cent.
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