Vancouver, Canada — After a massive slowdown in Canada’s expensive housing market, domestic real estate sales appear to be gradually increasing again.
It is the cause of optimism across the country’s sector after central banks lowered key interest rates in three years.
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Bank of Canada’s 0.25% interest rate cut on September 17th — reflecting the movement of its US counterparts on the same day — expects thousands of properties to be sold to experts who could help raise home sales and prices.
Mary Sialz, a mortgage broker in Toronto, said he saw the homes go on sale for a long time this year as many clients refrained from purchasing amid financial worries.
“It’s a little later than before,” she told Al Jazeera before the fee announcement. “Prices have really skyrocketed during the pandemic, and it was almost like shopping.
“Things have been pretty gentle since then.”
She said many home buyers were reluctant to invest amid the chaotic imposed tariffs on US President Donald Trump’s imports in Canada.
As a result, many sellers were pressured to calm down less.
“I think there was a general hesitation,” Sialtis said.
However, last month, the Canadian Realtor Association (CREA) found that average home prices rose nearly 2% since last year, resulting in a slight increase of just over 1% nationwide, a fifth consecutive year.
Real estate is one of Canada’s most lucrative sectors. It accounts for approximately $400 billion (US$287 billion) of gross domestic product, accounting for 13% of Canada’s economy.
“The prices should have gone down faster.”
Last week, the Bank of Canada reduced the federal government’s set key interest rate to 2.5%, a quarter point down.
Central bank governor Tiff McClem told reporters that the Crown Corporation council has a “clear consensus” that lowering the rate will “help the economy adapt while maintaining well-controlled inflation.”
“Obviously tariffs are weakening Canada’s economy,” he said at a press conference after interest rate cuts. “We’re moving forward with caution. Canadians don’t have to worry about a significant increase in their living costs.”
Increased housing activity was one of the “signs of resilience” for a small number of people, despite the banks describing “many unemployment” and economic weaknesses in a statement.
The central bank’s main interest rates affect the private bank’s own lending rates, including mortgages. A lower fee means more people can afford to take the House loan. Also, many mortgage holders can ease their costs somewhat.
Bank rates began to rise in early 2022, surged from just 0.25% in early 2022 to 5% the following year, the highest since 2001.
Keeping the rates high “had some people pulled back.” According to Sialtsis.
She said some of her customers didn’t buy the house despite becoming a buyer market. They were “controlled due to uncertainty due to trade tariffs and potential impacts.”
However, since April last year, interest rates set nationwide have been gradually falling as the country has fought post-pandemic inflation, which has increased the cost of living for Canadians.
Shaun Cathcart, a senior economist at Crea, said that historically high interest rates have kept the market “almost asleep” for three years.
“I thought 2025 would be a year of rebounds,” he said. “And of course, it was what happened that this total tariff disruption completely derailed it.
“People immediately pulled back and said, ‘We’re not going to make such a big decision. I don’t know if I’ll do the job or not.” ”
However, recent improvements in home sales suggest that the first “fear” from the trade war could be “a kind of calm,” he said.
And he believes there is a good chance that “this trend could accelerate this fall.”
In the case of Andrei Pavlov, a professor of economics at the University of British Columbia, the central bank holds the fees high as long as it’s “mistake.”
“The interest rates should have gone down much faster than they did,” he told Al Jazeera before the latest rate cuts.
“For the past two years, per capita income has been flat or declining in Canada.
Pavlov said he wants to further “significantly” cut central bank fees to move the housing market again.
“It’s a very early trend in recovery,” he said. “High interest rates clearly show a major headwind for real estate.
“Afterwards, some substantial interest rate cuts establish a normal recovery trend and return to the regular or seller’s market.”
Ottawa launches new housing agency
Before the interest rate cuts, the country’s Housing Infrastructure Minister Gregor Robertson allowed real estate sales slower than expected, but added that some areas are better than others.
For example, the Greater Toronto area, Canada’s most populous city, saw its home sales drop last month.
“In general, markets are challenged by US tariffs and threats faced across the world economy with war and uncertainty,” Robertson told Al Jazeera.
“Housing and infrastructure are at the heart of Canada’s economy, and it’s important to leverage overall investment and create more jobs.
On September 15, Ottawa announced Build Canada Homes, a new agency with a mission of C$13 billion (US$9.3 billion) to enhance the construction of up to 50,000 “factory-made” housing units on federally owned land.
In a statement, Prime Minister Mark Carney said the new agency will “partner with private market developers to build affordable homes for middle-class Canadians.”
The Ottawa plan will provide the private sector with “construction capabilities, innovation, supply chains and financing.” The government brings “federal land, faster approval, strong incentives” to the table.
And in a nod to the worst industry due to US tariffs, Kearney said the initiative was to “lead demand through the Canadian industry” in line with the “Canadian purchase” policy, including wood, aluminum and iron.
Economist Jim Stanford said the federal government is “ambitious” to serve as the future work centre and expand housing supply.
“The huge expansion of housing activities will help Canada survive Trump’s tariffs,” he said.
However, he warned that he relied on too much to private developers. He said it was “very speculative and very financial.”
“If it was just left to the private housing industry, we could see one of the effects of Trump’s recession would be a further decline in housing prices,” he warned.
While lower home prices could stimulate demand and construction, Canada’s Mortgages and Housing Corporation notes that “lower prices and tougher credits” could create “buyer risk,” and that too many unsold homes in the market could delay or cancel projects.
“Strength of the real estate market”
The Housing Minister said the affordability crisis has created urgency in building more homes for middle-income people and non-market homes for low-income and homeless people.
“We really need to expand the number of homes being built under the market,” Robertson said. “And it makes it more affordable for Canadians.”
According to mortgage broker Sialtsis, many Canadians (including tenants and first-time homeowners) have been deeply challenged by the lack of affordable housing.
Nearly two-thirds of Canadians own major homes, but affordability remains a major barrier, she noted.
But despite a slow recovery in the housing sector this year, Sialtis remains a “stable follower of strength” across the Canadian real estate market.
“Personally, I’ve seen a significant improvement in business activities over the last few weeks,” she told Al Jazeera after interest rate cuts.
