By Emmanuel Nduka
Canada’s real estate market is poised for a strong rebound in 2025, with experts predicting renewed investor interest as borrowing costs decline.
Following a period of sluggish activity, a more favorable economic environment—marked by lower interest rates and decreasing inflation—could trigger a new cycle of growth across multiple real estate sectors.
According to Reid Taylor, senior vice-president of Colliers Canada, the sector expects 2025 to signal the beginning of this recovery.
He notes that while the first half of the year might remain slow, the market is set to pick up as investor sentiment improves. Taylor predicts continued global interest in Canadian properties, particularly in retail, industrial, and multi-family sectors, with necessity-based retail centers (such as grocery stores) topping many institutional investors’ acquisition lists.
On his part, Royal LePage’s Phil Soper sees a growing number of individual landlords returning to the market as interest rates stabilize. Many small-scale investors, who had previously exited due to high borrowing costs and declining property values, are now positioning themselves to take advantage of more favorable conditions.
According to Soper, there are currently around 4.4 million Canadians with investment properties, and this number could rise as interest rates become more neutral in the second half of 2025.
In the residential sector, the pandemic-induced market excess gave way to a prolonged downturn, but with the cooling of interest rates, Soper forecasts a robust recovery. First-time homebuyers, who had been sidelined by high rates, are expected to play a key role in driving this recovery.
Home prices are anticipated to increase by about 6% across Canada, with single-family detached homes rising by around 7%. Vancouver and Toronto markets are expected to see moderate price increases, while Montreal may experience stronger growth, particularly in single-family homes.
The office market has lagged behind other sectors but is beginning to show signs of recovery. Taylor points to the uptick in office property transactions, particularly in suburban areas of Toronto, driven by improving leasing activity and a “flight to quality” in office spaces. While downtown office markets still face challenges, the overall office sector is expected to benefit from increased capital.
