Ontario Housing Market Outlook: Early signs of recovery, but headwinds remain
After a turbulent start to 2025, Ontario’s housing market continues to face pressure from high inventory levels, affordability challenges, and weakened buyer sentiment. RBC Economics now projects national home resales will decline by 3.5% this year, with much of that concentrated in Ontario and B.C. The anticipated post-rate-cut bounce has been slower to materialize, with the spring trade war temporarily disrupting the market. However, lower interest rates and easing uncertainty are beginning to draw buyers back in, signaling a slow but steady path to recovery.
Looking ahead to 2026, RBC expects a 7.9% rebound in national home resales, reaching 504,100 transactions. While activity is expected to improve in Ontario, it will still lag behind the pre-pandemic five-year average of 511,000 units mostly due to affordability constraints, reduced immigration targets, and a softer labor market.
Property values in Ontario are projected to see further downward pressure, with modest early-year gains in 2025 offset by price declines in late 2025 and into 2026.
RBC forecasts a 0.7% national price increase in 2025, followed by a 0.7% decline in 2026, with Ontario and B.C. leading the drop due to oversupply and intense competition among sellers.
Prices will vary significantly across the country. Balanced supply-demand conditions in the Prairies, Quebec, and parts of Atlantic Canada are expected to support modest price gains in 2025 and 2026. In contrast, Ontario and B.C. will continue to face challenges with imbalances in condo markets in Toronto and Vancouver likely spilling into other segments.
Despite these challenges, improved affordability from lower mortgage rates and softer prices could unlock pent-up demand as conditions stabilize. While recovery may be uneven across regions, Ontario’s long-term fundamentals—population growth, urban demand, and economic diversification—remain strong. Buyers and sellers alike should prepare for a market that’s slowly regaining its footing but will take time to find true balance.
Policy Interest Rate
The Bank of Canada (BoC) paused the Policy Interest Rate on July 30, 2025, balancing the need to contain inflation with supporting economic growth.
The next Interest Rate Announcement is set for Thursday September 4, 2025.
The BoC’s Policy Interest Rate is currently set at 2.75%.
Current Variable Mortgage Rate: 4.30% as of August 8, 2025
Current Prime Rate: 4.95% as of August 8, 2025
Policy Interest Rate: 2.75% as of August 8, 2025
Total Consumer Price Index: 1.9% Inflation as of June 2025
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