Weak condo demand in Vancouver and Toronto dragging down Canada's housing market | Daily Hive

Condominiums in downtown Toronto. (JohnInNorthYork/Shutterstock)

Canada’s housing market continued to show signs of cooling in May 2025, as the latest RPS-Wahi Home Price Index revealed a deceleration in national price growth for the third consecutive month.

The index, which combines current residential appraisal data with land registry transaction records across more than 1,000 communities, showed national home prices rising two per cent year-over-year. While still positive, that marks a steady decline from three per cent growth in March 2025 and four per cent in February 2025, underscoring a broad-based slowdown.

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One of the biggest contributors to the weakening trend is the condominium segment, which recorded a six per cent drop in prices compared to the same period last year. This is the sharpest year-over-year decline for condominiums since mid-2023 and continues a downward trend that began in early 2024.

By contrast, single-family detached homes posted a more stable performance, with prices rising by four per cent year-over-year, while townhouses and other semi-detached homes remained mostly flat.

The market’s softness was especially apparent in Canada’s largest urban centres. Vancouver, Toronto, and Hamilton all experienced year-over-year price declines, with Vancouver falling by four per cent, and both Toronto and Hamilton down three per cent. These regions had shown some renewed momentum earlier in the spring, but May 2025’s data suggests a reversal, especially in the condominium-heavy downtown cores.

In fact, the struggling condominium markets in Vancouver and Toronto are considered one of the main drivers of the overall cooling of Canada’s housing market.

Condominium prices fell by seven per cent year-over-year in May 2025, representing a tie for the largest year-over-year decline in condominium values in 20 years, since the index was established in 2005. April 2023 and May 2023 were the only times that condominium prices fell at such a rate, which was towards the end of the Bank of Canada’s last rate-hiking cycle.

Despite the national moderation, several smaller cities bucked the trend. Quebec City stood out with a striking 14 per cent annual increase in home prices, while Edmonton and Montreal saw gains of 10 per cent and eight per cent, respectively. Victoria home prices also went up by eight per cent.

Analysts for the index also suggest that early data shows some of the demand for housing in Calgary has shifted to Edmonton.

These markets appear to be benefiting from relatively more affordable price points and sustained demand relative to supply.

But overall economic uncertainty continues to cast a shadow over buyer confidence.

Ongoing geopolitical concerns, including Canada-U.S. trade tensions, may be contributing to hesitation in the market. At the same time, slight improvements in affordability, such as reduced borrowing costs and early signs of a more optimistic consumer outlook, are offering a counterbalance — though not yet enough to reignite stronger growth.

As the summer season begins, the outlook for the housing market remains cautious. While interest rate relief and improving consumer confidence could support a rebound in the coming months, persistent condominium weakness and regional disparities are likely to shape market performance through the remainder of 2025.

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