Canada real estate: Home prices rose 3.8% in Q4 as sluggish market starts to pick up

After a challenging year for Canada’s real estate market, the final quarter of 2024 brought a glimmer of hope as home prices rose by 3.8%. This uptick reflects growing buyer activity following months of market sluggishness. According to Royal LePage’s latest housing market survey, the average home price in Canada reached $809,200 in the fourth quarter, signaling the beginning of what experts believe could be a gradual recovery.  

Despite this increase, prices remain 3.3% lower than the same period in 2023, highlighting the lingering effects of higher interest rates and tighter borrowing conditions. The Bank of Canada’s aggressive rate hikes throughout 2023 aimed to control inflation but also cooled housing activity, making it harder for many Canadians to qualify for mortgages. However, as inflation eased and rates stabilized, buyer confidence slowly returned, spurring renewed demand.  

One of the driving factors behind the price growth was a notable increase in activity in major markets like Toronto, Vancouver, and Montreal. These urban centers saw stronger competition among buyers, particularly in the condo and townhouse segments, as single-family homes remained out of reach for many. Smaller cities and suburban areas also saw moderate price gains as buyers looked for affordable options outside of major metropolitan areas.  

Supply remains a critical issue in the Canadian housing market. According to Royal LePage, a lack of inventory is preventing the market from fully bouncing back. Many homeowners are hesitant to list their properties due to concerns about high mortgage rates and limited options for their next move. This mismatch between supply and demand is keeping prices elevated and making it harder for first-time buyers to enter the market.  

Looking ahead, experts predict that the real estate market will continue to recover in 2025, but at a modest pace. The Bank of Canada’s decision on future interest rate changes will play a key role in determining how quickly the market stabilizes. Buyers and sellers alike will be closely watching economic conditions as they plan their next moves.  

While challenges persist, the end-of-year rise in home prices has given the Canadian housing market a much-needed boost of optimism. For buyers, sellers, and real estate professionals, the coming year will be pivotal in shaping the future of one of the country’s most essential industries.