Economist sees a fragile, region-split recovery as population growth stalls
Canada’s housing market entered 2026 on the back foot after a soft fourth quarter that flattened prices and knocked sales off their third‑quarter pace.
TD Economics projects only a “gradual, modest recovery” this year, with pent‑up demand set against weaker economic momentum, job softness and a Bank of Canada that is expected to “stay on the sidelines this year.”
Canada Mortgage and Housing Corporation (CMHC) previously forecasted that national home prices would fall about 2% in 2025, with steeper drops in Ontario and British Columbia, before a “gradual housing market recovery beginning in 2026.”
TD economist Rishi Sondhi said the recovery would be constrained by “elevated economic uncertainty, a subdued job market and a leveling off in interest rates.”
A new demographic risk stood out. Canada is “set to record another year of near zero population growth in 2026,” Sondhi said, driven by softer immigration and a net outflow of non‑permanent residents. That shift echoes CMHC warnings that sharply slower immigration would inject “significant uncertainty for both ownership and rental demand,” particularly in markets that have leaned heavily on newcomers.
The report painted British Columbia and Ontario as the weakest links. In B.C., sales dropped about 6% and average prices fell roughly 3% in 2025, with Vancouver posting a 10% price decline as condo inventories swelled.
Ontario saw “the steepest drop of any region,” as investor retreat, higher carrying costs and difficulty closing pre‑qualified deals left conditions “heavily in favour of buyers.”
Saskatchewan and Manitoba, by contrast, “recorded solid price growth in 2025,” helped by comparatively strong job markets and still‑favourable affordability, although easing growth is expected to cool gains this year.
Alberta’s market sat closer to balance, with listings rising and interprovincial migration easing from 2023 highs, setting up “trend‑like price growth” in 2026.
Quebec and Atlantic provinces have already banked large price run‑ups. Quebec prices jumped about 15% after a flat 2023, while Newfoundland and Labrador saw near‑double‑digit gains for a second straight year, leaving affordability more stretched and price growth expected to slow from here.
CPA Canada’s chief economist David‑Alexandre Brassard warned that a rare demographic reversal could upend long‑held assumptions about how demand, prices and construction behaved in the years ahead.
“From a housing perspective, this is new ground for Canada,” Brassard said. “We have never had a sustained period where housing demand wasn’t supported by population growth. That changes the baseline assumptions for sales, prices and construction.”
