Canadian Real Estate 2025: From Braking to a Cycle of Selective Investment

The Emerging Trends in Real Estate® 2025 report by PwC and the Urban Land Institute shows that Canada’s real estate market is shifting from a slowdown that lasted more than two years to a cycle of selectivity, where location, asset type, and financial capacity will determine opportunities.

Calgary stands out at the top of the outlook rankings thanks to a strong economy and rapid population growth. According to the Conference Board of Canada (CBoC), the city’s real GDP is expected to rise from 1.1% in 2024 to 2.5% in 2025. In the 12 months ending July 1, 2023, Calgary attracted over 87,000 new residents from other provinces and abroad. The average rent for a two-bedroom apartment is projected at CAD 1,859/month – lower than Vancouver (CAD 2,380) and Toronto (CAD 2,120). The city is also pushing ahead with office-to-residential conversions: an additional CAD 52.5 million has been allocated to a program offering up to CAD 75/ft² in support, with 11 projects approved and the first 112 units delivered in April 2024.

In Toronto and Vancouver, the condo segment is adjusting to rebalance supply and demand. In the Greater Toronto & Hamilton area, unsold condo inventory reached 25,893 units (mid-2024) – a new record; the number of units under construction fell to 87,508, nearly 19,000 fewer than a year earlier. New condo prices remain significantly higher than resale units, combined with elevated borrowing and construction costs, slowing presales. Vancouver maintains a downtown office vacancy rate of 10.8% – the lowest among major cities – but the industrial sector has slowed, with net rents down 5.2% year-over-year.

Transactions are in a “price discovery” phase: total transaction value in the first half of 2024 fell 50% compared to the same period in 2023 (25% decline if excluding one large deal). The bid-ask gap is narrowing, and anticipated interest rate cuts are expected to boost supply, especially from owners seeking to reduce debt or avoid costly refinancing.

Capital flows are also shifting: as domestic pension funds, insurers, and REITs reduce purchases, family offices and foreign investors are stepping in. U.S. FDI into Canada’s real estate, rental, and leasing sectors rose 15.3% between 2022 and 2023. Bankruptcies in this sector increased 51% in the 12 months ending June 30, 2024, creating opportunities to acquire assets from restructuring deals.

On housing supply, CMHC forecasts about 232,000 housing starts in 2025 – higher than 2024 (~224,000) but well below the peak of 271,000 in 2021. To restore affordability, Canada will need an additional 3.5 million homes by 2030 compared to the current trend.

City Snapshot – Canadian Real Estate 2025