Canada’s housing market is undergoing one of its sharpest corrections in decades, with national price indexes falling to multi-year lows even as some cities buck the trend entirely, according to multiple recent reports from economists, real estate boards and industry officials.
The Teranet-National Bank Composite House Price Index, which tracks 11 major metro areas, fell 0.2 per cent from July to August, marking the eighth monthly decline in nine months and pushing the index to its lowest level since April 2023. Prices are now down 4.2 per cent from their November 2025 peak, according to National Bank economist Daren King. On a year-over-year basis, the index fell 3.6 per cent, with Vancouver leading declines at 6.5 per cent, followed by Hamilton at 6.2 per cent and Toronto at 6.1 per cent. Quebec City, Montreal and Winnipeg, by contrast, posted year-over-year gains of 9.0 per cent, 4.1 per cent and 2.4 per cent respectively.
Toronto and Vancouver Lead Global Decline
A separate analysis from UBS, the global wealth manager, ranked Toronto and Vancouver among the weakest real estate markets in the world in its annual Global Real Estate Bubble Index. Toronto, which UBS says was the strongest housing market it tracked between 2014 and 2022, has seen prices fall roughly 30 per cent since their 2022 peak, including a 10 per cent drop in the past year alone. UBS attributes the reversal to Ottawa’s foreign buyer ban, a glut of housing supply and higher interest rates, and currently rates Toronto’s bubble risk as “moderate.”
Vancouver’s prices are down about 20 per cent from their 2022 peak, with home sales at a 25-year low, UBS said, citing elevated inventory, slower economic growth and inflation concerns. Local data from the Toronto Regional Real Estate Board shows August listings down 14 per cent year-over-year and sales down roughly two per cent, with the composite benchmark price off 4.5 per cent annually to an average of $993,410 — well below the February 2022 peak of $1,334,544. Rents in the Greater Toronto Area have also eased, with one- and two-bedroom units averaging $2,273 and $3,013 respectively, down about two per cent from a year earlier.
Marco Pedri, a real estate broker with Shoreline Realty, said current conditions favour renters and buyers over investors. “Even on the purchasing side … for those who may have been looking to get into the market to purchase something for their own personal use, rather than an investment, this may be an opportunity to actually secure something,” he told CTV News.
A Patchwork Recovery, Not a National One
RBC Economics described conditions as “bumpy and uneven” across the country in an October report authored by assistant chief economist Robert Hogue. Toronto’s tentative spring recovery stalled in September, with resales down 5.2 per cent and the benchmark price down 0.5 per cent month-over-month, a reversal Hogue linked to renewed Canada-U.S. trade tensions and long-term interest rate concerns. Vancouver remains “squarely in correction mode,” with Hogue warning that “further depreciation will likely be necessary to draw in more buyers” given inventory near decade highs.
Montreal, meanwhile, has seen inventory rise 20 per cent year-over-year amid the strongest influx of sellers in six years, limiting price growth. Calgary has stayed comparatively stable, though single-detached homes saw a 4.4 per cent increase in resales against an 8.3 per cent price drop for condo apartments. Edmonton showed signs of stabilization after earlier steep depreciation.
Why Rate Cuts Alone Won’t Fix Affordability
Bank of Canada senior deputy governor Carolyn Rogers said in a Victoria speech that the central bank’s policy rate is “too blunt” an instrument to resolve housing affordability on its own. “We set one interest rate for the whole economy… interest rates cannot directly address supply constraints. They can’t build homes, rezone land or speed up permits,” she said. Rogers noted residential investment made up 4.3 per cent of GDP in 2000 versus 8.3 per cent for business investment in equipment, with those shares now largely reversed — underscoring housing’s outsized economic weight.
Supply Push Still Lagging Demand
On the construction side, the federal Build Canada Homes agency, launched roughly a year ago, has committed to about 19,000 affordable units nationally, but only around 2,000 are currently under construction. CMHC chief economist Mathieu Laberge said housing starts have hovered near 250,000 annually over the past two years, while 417,000 to 469,000 units must be built annually by 2036 to restore 2019-level affordability. Dave Wilkes of the Building Industry and Land Development Association said Ontario’s HST rebate and reduced development charges have helped spur some new supply in overheated markets like Toronto, while federal housing minister Gregor Robertson said Ottawa is working to reverse decades of absence from affordable housing funding.
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