We continue our series of reports on growing real estate markets. In our opinion, these markets are of interest to both individuals (investors) and companies, including those operating in the securities sector of the real estate market.

Canada real estate market is developing. In 2019-2023, the Real House Price Index in Canada (according to OECD, PPP USD) increased by 17.3%. This ranks 10th among OECD countries.

Center for City Development Policy analyses the data and develops a forecast for house price index (residential property prices) for the 10 largest cities in Canada. In this report we present forecast for Canada and 4 major cities – Toronto, Montreal, Calgary, Quebec).  The forecast is developed for the period 2025-2027.

Detailed comments on Canada and 4 cities are presented in the Canada full report.

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‍Canada: The House Price Index (HPI) in Canada grew by 25.9% from January 2020 to December 2022, driven by a period of low interest rates. Following the increase in the bank rate to 5.25%, the residential building price index experienced a decline, averaging -1.9% in October 2024 compared to August 2022.

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Key Findings:

- Our model indicated that Canada house price index is most sensitive to the bank rate. As interest rates decrease, the house price index is projected to grow in Canada as a whole and in most cities over the medium term (2025-2027).

- Unlike previously studied countries (Spain, Central and Southern Europe), the house price index demonstrated a weak correlation with GDP dynamics. We attribute this to the strong dependence of Canada's GDP on commodities exports. Consequently, fluctuations in commodities prices significantly impact exchange rates, GDP growth, and inflation.

- A defining characteristic of Canada are record immigration levels. Currently, immigration influences the growth of rental rates. However, as immigrants adapt and integrate into the labor market, we anticipate an increase in housing demand and, consequently, a rise in the HPI in the medium term.

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Our base forecast for Canada for 2025 - 2027: +6.9% over 3 years

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Cities by Total Forecasted Growth (2025-2027):

- Toronto +7.1%

- Montreal +4.2%,

- Calgary +8.3%,

- Quebec city +7.1%

Forecast results for the remaining six cities are excluded from this report due to their high volatility, particularly given the time frames of potential bank rate decline.

Our forecasting model utilized data from Canada Statistics, IMF, Macroeconomic projections of Bank of Canada and Canada Department of Finance, OECD.

The detailed methodology is presented in Methodology section of full report.

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Detailed comments on Canada and 4 cities are presented in the Canada full report.

Reports on other Countries can be found in Analytics section.

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DISCLAIMER: Since the market of each country and each city is complex and the situation for all properties is individual, the research team doesn’t offer any individual investment solutions and doesn’t make any recommendations. In case you are planning to purchase/invest in real estate you should contact local real estate market specialists, who may provide you competent consultation.

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Rubric: housing, property, emerging markets, pricing and forecasting, house prices analytics, canada, montreal, toronto, quebec, calgary, rent prices, real estate

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