Toronto housing: market forecasts
The Canadian real estate market leads the way in terms of growth momentum. Traditionally, it has been very active. However, December 2024 was an exception—demand for apartments in Toronto fell, and sales were down 19% for the month.
Analysts cite high borrowing costs and high house prices as reasons for the decline in activity. At the same time, the Bank of Canada cut its key interest rate last year. The regulator is likely to continue its easing policy in the current period.
According to Elehia Barry-Sproule of TRREB, the situation should improve. Current property values are below their peak in the market’s history. Combined with the reduction in the base rate, this bodes well for buyers.
Despite the dip at the end of 2024, activity during the period was higher than in 2023. The main indicators of growth were:
– 2.6% growth in the number of transactions;
– a 16% increase in new supply;
– achievement of the maximum volume of new dwellings;
– a rise in the share of rental apartments in new condominiums to 41%.
The secondary market is in a state of oversupply. Owners are actively transferring properties to the rental segment in order to make a profit. High demand in this sector is keeping condominium vacancy rates low.
Trends in the Canadian housing market
The Toronto market is following a typical national trend. The pace of rental growth has slowed as a result of record supply growth. This is the first time this has happened in 30 years. Nevertheless, rental costs in the major cities remain extremely high. The average rental price for a two-bedroom apartment rose by 5.4%. Interest rates have risen by almost 24%. By 2024, demand for property has increased significantly.
Analysts attribute this change in demand to the tightening of Canada’s immigration policies, which have led to a decline in the number of international students. At the same time, buying a home in major cities such as Toronto and Vancouver remains out of reach for a significant portion of the population, leaving renting as the only option.
The government has long struggled with high housing prices, but so far, it has been unsuccessful. To stimulate the economy, the Bank of Canada has lowered borrowing costs. The policy rate is likely to be around 2.3% by the end of this year, up from 3.3% in December 2024.
Experts believe that demand in the Canadian market will recover in the coming months and that sales will rise. The change in mortgage lending rules will facilitate this. It is now possible for first-time homebuyers to obtain a 30-year loan.