As 2024 comes to a close, it’s time to look ahead to the year to come. Whether you’re a buyer, seller, tenant, or investor, 2025 is shaping up to be an important year for the real estate market.
Here, we offer an overview of the forecasts and trends expected to influence the Quebec housing market in the months ahead. But first, let’s reflect on the year that’s just passed.
2024 real estate market review
The year began with a period of calm and stability, followed by a phase of growth in the second half. The recovery of market activity, a decline in interest rates, and the evolution of property prices were the three key factors that defined the state of the market in recent months.
A year marked by the recovery of activity
Following a cautious 2023, 2024 witnessed a significant rebound in real estate activity. Residential sales increased across nearly all property categories, particularly in the third quarter.
According to data from the Association professionnelle des courtiers immobiliers du Québec (APCIQ), 20,620 residential sales were recorded province-wide during this period, a substantial rise of 13% compared to 2023, well above the typical market average.
November 2024 proved to be one of the most active months in the market in decades, with sales jumping by 47% in the Montreal area and 46% in the Quebec City area compared to the previous year.
This surge in activity was largely driven by the gradual decline in interest rates and a renewed sense of consumer confidence.
Interest rate decrease: a relief for many households
The decrease in the Bank of Canada's key interest rate, and consequently in mortgage rates, was undoubtedly one of the most significant trends of the year. After holding steady at 5% for several months, the key rate began to gradually decline in June 2024, reaching 3.25% by December.
While this decrease was expected, as many economists and experts had forecasted it in their 2024 projections, it was still welcomed by many households across Quebec.
Homeowners awaiting mortgage renewals were particularly relieved, as the rate drop helped ease the financial burden.
First-time buyers, who had been holding off for more favourable mortgage rates, also took advantage of the opportunity, with many entering the market in the fall to benefit from the improved conditions.
Price trends by region and property type
Property prices across Quebec continued to evolve throughout 2024.
By the third quarter, the median price of single-family homes in the province reached $448,550, reflecting a 7% increase compared to the same period in 2023. Condominiums and small income properties also saw price gains, rising by 4% and 10%, with median prices of $379,250 and $583,000, respectively.
Here’s a closer look at how prices varied by region:
| Region | Single-family home | Condominum | Plex |
| Montral | $590,000 (+6%) | $410,000 (+4%) | $771,000 (+6%) |
| Quebec City | $390,000 (+11%) | $279,900 (+16%) | $450,000 (+18%) |
| Gatineau | $460,000 (+6%) | $307,000 (+2%) | $511,250 (+5%) |
| Sherbrooke | $425,000 (+9%) | $300,000 (+4%) | $536,000 (+29%) |
| Trois-Rivières | $345,000 (+11%) | $263,500 (+8%) | $341,000 (+10%) |
| Saguenay | $300,000 (+18%) | $260,000 (+17%) | $295,000 (+13%) |
Source: Association professionnelle des courtiers immobiliers du Québec (APCIQ)
Many mortgage renewals coming in 2025
In 2025, nearly 1.2 million fixed-rate mortgages will be up for renewal across Canada, according to the Canada Mortgage and Housing Corporation (CMHC). Of these, 85% of borrowers initially secured their mortgages at lower rates, when the key rate was at or below 1%.
For most homeowners facing renewal, this will mean adjusting to much higher rates. This shift could create additional financial challenges for many, as they transition from historically low interest rates to the current, higher levels.
A financial challenge for homeowners
With mortgage rates higher than they were five years ago, 2025 is shaping up to be a critical year for homeowners who need to renew their loans. Many will face higher monthly payments, which could further strain their already fragile financial situation, especially given the inflationary pressures of recent years.
The rising cost of living has significantly impacted the budgets of households across Quebec and Canada, often increasing their debt levels. This financial vulnerability, combined with the higher mortgage payments at renewal time, could put many homeowners in a precarious position.
Potential increase in payment defaults
The CMHC is closely monitoring the situation, as a worsening of these conditions could raise concerns for the Canadian economy. The organization warns that the rate of overdue mortgages may increase, similar to the rise in defaults seen with credit card and auto loans.
While this is a trend to watch in the coming year, it's important to keep things in perspective: in the second quarter of 2024, only 0.20% of mortgages were overdue (more than 90 days), a lower proportion than what was observed during the pre-pandemic years.
Further rate cuts expected?
Predicting the future of interest rates is challenging, as they will be determined by the Bank of Canada's decisions, which are influenced by inflation and broader economic uncertainties.
While the current outlook suggests a period of stabilization, a rise in inflation could prompt the Bank to implement tighter measures, potentially increasing rates.
Here are the key dates to watch for in 2025, when the Bank of Canada will announce its decisions on the key rate:
- January 29, 2025
- March 12, 2025
- April 16, 2025
- June 4, 2025
- July 30, 2025
- September 17, 2025
- October 29, 2025
- December 10, 2025
New mortgage rules to watch
The significant number of mortgage renewals is not the only factor set to shape the mortgage market in 2025. Starting in the first quarter, new regulations will come into effect, potentially impacting the property acquisition plans of some households.
In March 2024, the Office of the Superintendent of Financial Institutions (OSFI) informed banks that they would need to cap mortgage loans. The loan amount will now be limited to a maximum of 4.5 times the borrower’s annual income.
For example, a couple with an annual income of $100,000 could request a maximum mortgage loan of $450,000. However, exceptions will apply in larger cities, where market prices are higher.
This new rule is designed to limit the number of highly leveraged residential mortgages and adds to the existing bank qualification regulations, including the stress test.
It’s important to note that this will only apply to new mortgage loans. Existing loans and renewals will be exempt from this measure.
Impact on market accessibility
For many Quebec households, the dream of homeownership is becoming increasingly out of reach. While the new regulation aims to reduce borrowers' debt-to-income ratio, the limitation on mortgage loan amounts could make property ownership even more difficult for some, particularly young people and first-time buyers with limited purchasing power.
This change could also have a broader impact, potentially discouraging builders from launching new projects and deterring some investors who may have less capital to invest. As a result, the supply of housing could be further constrained, adding to the challenges already faced by potential homeowners.
Increase in sales despite limited inventory
The outlook for 2025 appears positive for real estate. If current trends continue, transactions could continue to grow, bolstered by the recent drop in mortgage rates that encourages more buyers to enter the market. However, sales are unlikely to reach the record levels seen during the pandemic.
The inventory of available properties is expected to remain constrained. While listings may increase by 8%, supply will still fall short of meeting demand, especially in the single-family home segment. This ongoing shortage of available homes will likely continue to pressure the market.
New home constructions still insufficient
Despite some progress in residential construction and new housing starts since the beginning of 2024, the pace of new home development will remain too slow to restore supply in 2025.
According to Desjardins' forecasts for the Quebec real estate market, there could be 51,911 housing starts in 2025. This would represent a 10% increase in rental apartment construction compared to the expected total for 2024. However, the growth in single-family homes and condominiums is expected to be much more modest, with only a 4% increase. This continued slow pace of construction will likely keep supply constrained, especially in the face of rising demand.
This scarcity of new constructions will continue to put pressure on prices and create a competitive environment for buyers, who will need to make an offer quickly to secure a property.
Will home prices rise in 2025?
Those hoping for a drop in property prices before buying may be disappointed. Instead of decreasing, home prices are expected to keep rising in the coming months and years, primarily due to the ongoing shortage of housing supply.
As early as spring 2024, the CMHC predicted that home prices could return to the peaks seen in 2022 by 2025 and possibly set new records by 2026.
More recently, Royal LePage forecasted a 7% increase in property prices provincially in 2025, surpassing the historical average of 5%. The Quebec City area, in particular, could see significant price increases. On the other hand, Proprio Direct estimates a more moderate rise of around 3%.
Significant rent increases ahead
The rental market will also feel the impact of the ongoing supply shortage. With demand for housing continuing to rise, tenants may face a challenging year in 2025.
Many economists are predicting a sharp increase in rents next year, and this could be even more pronounced in Quebec compared to other regions, due to the calculation method used and the lack of limitations.
While the recommended rent increase was 4% in 2024, the rate for 2025 could be higher, as it is based on the inflation rate for rents from the previous year. This calculation considers the "rent" component of the Consumer Price Index (CPI), which rose by 8.3% in the third quarter of 2024.
The Administrative Housing Tribunal has yet to release its rent increase recommendations for 2025, but these should be published soon as the new year approaches.
Advice for buyers and sellers in 2025
Are you planning to pursue a real estate project in 2025? Whether you’re a buyer or a seller, understanding market trends is essential to make an informed decision. In addition to working with industry experts to guide you through every step, here are some tips to help you navigate the market:
Advice for buyers:
- Act quickly to secure the property you’re interested in.
- Don’t delay your project unnecessarily, as prices are likely to continue rising.
- Take advantage of lower mortgage rates to increase your borrowing capacity and purchasing power.
- Stay flexible in your purchase offers to stay competitive.
- Be prepared for strong competition, especially in high-demand areas.
- Obtain mortgage pre-approval to speed up the process.
Advice for sellers:
- Be strategic with your listing and approach.
- Showcase your property to highlight its best features.
- Set a realistic and competitive price based on the current market conditions.
- Tailor your sales strategy to your specific property type and location.
- Don’t hesitate to negotiate, as this could help you secure a better deal.
You want to buy or sell a house in 2025?
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