While the Greater Toronto Area (GTA) is expected to see an increase in home prices in 2025, condo prices will not recover as quickly, according to a new report by Royal LePage.
On Thursday, the real estate brokerage released its Market Survey Forecast for 2025, predicting that the aggregate price of a home in the fourth quarter of 2025 will increase by five percent year-over-year to $1,225,770.
“During the same period, the median price of a single-family detached property is expected to rise by 7.0 percent to $1,523,466,” the report stated.
However, due to a surplus of inventory, Toronto’s condo market appears to be on “a different trajectory,” the report notes. GTA condos are expected to see a one percent decline in price year-over-year by the fourth quarter of 2025.
“Toronto’s condo market is the softest it’s been in recent history, specifically in the downtown core. With interest rates expected to ease further, thousands of new units set for completion next year, and new lending policies to ease the burden of monthly carrying costs, this is a rare window of opportunity for first-time buyers,” said Shawn Zigelstein, a Royal LePage broker, in a written statement accompanying the report.
“The wave of new condo units set to hit the market will offer a period of better affordability, but it will be short-lived. Fewer project starts today mean a period of ultra-low completions several years from now. The eventual return of real estate investors to this segment will result in increased competition down the road,” Zigelstein added.
He also noted that Bank of Canada rate cuts are now encouraging buyers to return to the Toronto housing market after waiting for “prices to reach their floor.”
“Following the supersized rate cut made in October, the tide began to turn, and activity picked up materially. This momentum is expected to persist through the winter months, giving way to an early spring market in 2025,” Zigelstein said.
“While this boost in activity has not yet led to a price increase, inventory that had been building up over the past several months is now being quickly absorbed. Another significant batch of supply is unlikely to come online before spring, meaning buyers re-entering the market will start to feel competition heat up and see some upward pressure on prices.”
FAQs
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Why are home prices expected to rise in Toronto in 2025?
Home prices are set to rise in 2025 due to an improving market, with expected rate cuts and higher buyer activity. The demand for homes is likely to outpace supply. -
Why is the condo market expected to decline in 2025?
Toronto’s condo market faces a surplus of inventory, especially in the downtown core. With many new units scheduled for completion and easing interest rates, condo prices are expected to decrease slightly. -
What factors are influencing the rise in home prices?
The rise in home prices is influenced by the Bank of Canada’s rate cuts, increased buyer activity, and a limited supply of new homes entering the market in the near future. -
What is the outlook for first-time homebuyers in Toronto?
The surge of new condo units hitting the market presents an opportunity for first-time buyers to take advantage of better affordability, though this period may be short-lived due to future competition. -
How will the spring 2025 market differ from the winter months?
Activity in the Toronto real estate market is expected to pick up in the winter months, leading to a strong early spring market in 2025, with increased competition and upward pressure on prices.
