Here's how much home prices in Canada are expected to drop in 2025

Following an uptick in home prices in 2024, British Columbia could be among the parts of Canada to see a potential decline in housing prices in 2025.

According to a recent forecast by TD Bank's economists, average home prices in B.C. will fall by 4.1 per cent in 2025, before rising by 2.7 per cent in 2026. This comes after a 1.7 per cent increase in home prices in 2024.

This will be the country's second-largest dip in home prices, following the forecast for Ontario: a decrease of 6.4 per cent in 2025, and a subsequent increase of 2.2 per cent in 2026. Last year, home prices in Ontario went up marginally, by 0.3 per cent.

As for the number of home sales in B.C., the volume of transactions is expected to decrease by 0.8 per cent, before rallying by a staggering 14.7 per cent in 2026. Similarly, Ontario will see a 7.6 per cent drop in home sales in 2025, followed by a 16.9 per cent increase in 2026, the bank's experts say.

"This reflects muted demand conditions in both [B.C. and Ontario] markets, and supply/demand balances that are heavily skewed in the favour of buyers," reads the bulletin by TD Economics.

The only other provincial market that will see a drop in home prices in 2025 is Prince Edward Island.

Nationally, home prices will fall by 3.2 per cent in 2025 — pulled down by B.C. and Ontario — and increase by 4.8 per cent in 2026, after experiencing an uptick of 1.9 per cent in 2024. The number of home sales Canada-wide will go up by 10.1 per cent in 2026 after dipping by 0.9 per cent in 2025.

Previous forecasts called for a resurgent market in 2025, fuelled by the Bank of Canada's continued cuts to the policy interest rate. But this has now been more than offset by the economic uncertainty brought on by U.S. president Donald Trump's trade war.

"The one-two punch of winter storms and tariff-related economic uncertainty sent a chill through Canadian housing markets in the first quarter. We're now tracking a double-digit quarterly decline in Canadian home sales and a mid-single digit drop in Canadian average home prices," reads the update.

"These outcomes are much weaker than our pre-Trump inauguration forecast made in December, where we assumed that a loosening in federal mortgage rules, lower interest rates, and continued economic growth would fuel a modest Q1 gain in sales and prices."

The forecast for a rebound in Canada's housing market in 2026 is driven by the expectation that there will be reduced tariff-related uncertainty and multi-year lows for interest rates, accompanied by "significant pent-up demand." 

However, the bounce back will be restrained by poor affordability in the key markets of B.C. and Ontario.

Elsewhere in the country, home prices in Quebec rose by 7.4 per cent in 2024 and are forecast to increase by another 7.4 per cent in 2025, followed by a more modest rise of 4.9 per cent in 2026. As for home sales volumes, they climbed by 18.9 per cent in 2024, with projected increases of 8.6 per cent in 2025 and a slight uptick of 1.3 per cent in 2026.

Alberta saw a 10 per cent increase to its home prices in 2024. More modest price gains of 4.4 per cent and 5.3 per cent are expected for 2025 and 2026, respectively. With the volume of transactions, a 2.2 per cent dip is expected in 2025 — after a 9.2 per cent increase in 2024 — and a 7.9 per cent increase is forecast in 2026.