Predictions for 2025: Ontario Real Estate and Economic Outlook


As we embark on 2025, Ontario's real estate market and broader economic conditions are set to be influenced by a combination of government policies, monetary adjustments, and demographic trends. Understanding these potential changes can help buyers, sellers, and investors make informed decisions.


Mortgage Rate Predictions for 2025

The Bank of Canada’s monetary policy will be a significant determinant of market dynamics in 2025. Following the two consecutive 50-basis-point rate reductions in late 2024, the current policy interest rate stands at 3.25%. Market analysts widely anticipate further rate cuts throughout 2025, contingent upon inflation trends and economic performance.


According to Morningstar (2025), projections suggest the Bank of Canada may lower rates by an additional 75 to 100 basis points by year-end. These reductions aim to support economic growth amidst weakening global conditions. Such moves are expected to lower borrowing costs, improving affordability and potentially driving increased demand in Ontario’s real estate market.


Real Estate Market Forecasts

Increased Sales Activity

The Canadian Real Estate Association (CREA) predicts a 6.6% rise in national home sales in 2025, driven in part by improved mortgage affordability and pent-up demand from sidelined buyers in 2024. Key regions in Ontario, including Toronto and Ottawa, are likely to see heightened activity, especially in mid-market and suburban properties.


Moderate Price Growth

Price growth in 2025 is expected to remain modest. Factors such as higher housing supply—spurred by government initiatives to promote new construction—and affordability challenges in urban centers are anticipated to temper rapid price increases. Regions like Simcoe County and Durham may outpace urban areas like Toronto in terms of percentage price appreciation.


Rental Market Trends

As borrowing costs ease, investors are likely to re-enter the market, adding supply to the rental housing sector. However, strong demand from tenants could still result in rental rate increases, particularly in high-demand areas such as the Greater Toronto Area (GTA).


Government Policies and Initiatives

Support for First-Time Buyers

Changes to mortgage rules in late 2024 have already increased affordability for first-time buyers. Notable changes include:
• An increase in the insured mortgage cap to $1.5 million.
• Extended amortization periods of up to 30 years for new builds and first-time buyers.

Secondary Suites and Housing Supply

Effective January 2025, homeowners can access insured mortgage refinancing to add secondary suites. This initiative is designed to address housing supply shortages by encouraging the creation of more affordable rental units.


Broader Economic Outlook

Inflation and Economic Growth

With inflation showing signs of stabilization, the Bank of Canada’s rate cuts are expected to stimulate economic activity. Morningstar (2025) highlights that easing monetary policy will likely support consumer spending, a critical driver of economic growth. However, global economic uncertainties, including energy market volatility, could pose risks to growth projections.

Employment Trends

Ontario’s job market is projected to remain strong, particularly in sectors such as technology, healthcare, and green energy. Employment growth will support housing demand, particularly in suburban and emerging urban areas where affordability remains comparatively better.


Key Takeaways for 2025

• Buyers: Lower mortgage rates and improved affordability present opportunities to enter the market, particularly in suburban and entry-level segments.


• Sellers: Stable demand and moderate price growth indicate favorable conditions, especially for well-priced properties.


• Investors: Rate cuts and government incentives for secondary suites offer attractive opportunities for rental property investments.

Staying informed about market trends and policy changes is essential for navigating 2025’s dynamic real estate landscape. As a dedicated realtor, I am here to provide personalized insights and support to help you achieve your goals.

💬 Contact me today to discuss how these updates can help you achieve your real estate goals in 2025.

 

References

Canadian Real Estate Association. (2025). Quarterly housing market forecasts. Retrieved from https://www.crea.ca/housing-market-stats/canadian-housing-market-stats/quarterly-forecasts/

Morningstar. (2025). How much will the Bank of Canada cut rates in 2025? Retrieved from https://www.morningstar.ca/ca/news/258779/how-much-will-the-bank-of-canada-cut-rates-in-2025.aspx

Government of Canada. (2024). Changes to mortgage insurance rules to enable homeowners to add secondary suites. Retrieved from https://www.canada.ca/en/department-finance/news/2024/10/mortgage-insurance-rule-changes-to-enable-homeowners-to-add-secondary-suites.html

Canadian Mortgage Trends. (2024). New mortgage rules take effect tomorrow: What buyers need to know. Retrieved from https://www.canadianmortgagetrends.com/2024/12/new-mortgage-rules-take-effect-tomorrow/