Experts predict that Canada’s real estate market is entering a new growth cycle in 2025, driven by falling borrowing costs and improved investor sentiment. Key industry leaders highlight a shift in activity across commercial and residential sectors, signaling recovery after years of sluggish performance. 

Renewed Investor Confidence: 

Reid Taylor, senior vice-president of capital markets at Colliers Canada, sees 2025 as a turning point for real estate investment, citing lower interest rates and easing inflation as major drivers. He anticipates growing interest in retail properties, particularly grocery-anchored centers, alongside stable demand for industrial and multi-family assets. Taylor notes that global and domestic institutional investors are expected to play a pivotal role in reviving market activity. 

Individual Landlords Returning: 

Phil Soper, president and CEO of Royal LePage, foresees a resurgence of individual landlords and small-scale investors. Many left the market during the high-interest-rate period, but with borrowing costs declining, they are gradually returning. Soper emphasizes the importance of these landlords, who provide the bulk of Canada’s rental stock, and estimates that millions of Canadians aspire to invest in real estate within the next three years. He also highlights the enduring appeal of real estate as a savings vehicle, akin to an RRSP, bolstered by consistent long-term property value appreciation.

Residential Market Recovery: 

Canada’s residential real estate market is expected to rebound strongly in 2025. Soper attributes this recovery to first-time buyers returning as borrowing costs decrease. He anticipates intensified competition in major markets like British Columbia and Ontario, with bidding wars likely to drive prices higher. Royal LePage forecasts a 6% national increase in home prices by the end of 2025, with single-family detached homes expected to see the highest growth at 7%. 

Regional forecasts vary, with Toronto set to see a 5% rise in aggregate home prices and Vancouver a 4% increase. Montreal is predicted to experience the most robust growth, with prices rising by 6.5% overall and single-family homes leading at 7.5%. 

Office Market Outlook:

While Canada’s office market has lagged behind other sectors, Taylor predicts gradual improvements in 2025. Suburban office properties in Toronto have already shown positive leasing trends, and higher-quality downtown offices remain resilient. Increased sales in other property types are expected to spur renewed activity and investment in office spaces, helping to stabilize valuations and attract institutional interest.

A New Chapter for Canadian Real Estate: 

As borrowing costs decline and investor confidence grows, Canada’s real estate market is positioned for a promising year ahead. From residential properties to commercial sectors like retail and office spaces, 2025 could mark the beginning of a dynamic new cycle for the industry.