Home prices in Toronto and Vancouver expected to drop as the rest of Canada sees a hike: LePage
The latest annual report from real estate company Royal LePage is forecasting a modest hike in home prices of one per cent by the fourth quarter of 2026. But that overall figure is hiding a significant drop in two of Canada’s most expensive cities, Toronto and Vancouver.
Calling 2026 “a crucial reset year for Canada’s housing market,” the Royal LePage Market Survey Forecast predicts that the average price of a home in Canada is expected to rise to $823,016 in the fourth quarter of 2026. That figure includes single-family detached properties, which are expected to rise two per cent to $876,934, and condominiums, which are anticipated to decrease 2.5 per cent to $563,918.
Also hiding in the overall average are gains and losses in individual markets. For instance, the average home price in the Greater Toronto Area is expected to fall 4.5 per cent next year, while greater Vancouver is expected to see a drop of 3.5 per cent.
Montreal, on the other hand, is forecast to rise five per cent. And Quebec City is forecast to see the highest gains among all major regions in 2026, with the average home price expected to rise 12 per cent.
“Solid market fundamentals — including lower interest rates, increased supply and reduced competition — have created a more favourable environment for consumers,” said Phil Soper, president and CEO of Royal LePage, in announcing the figures.
“First-time buyers and those searching in the country’s most expensive regions have a rare window to act on their home ownership plans at reduced prices.”
This year saw a lowering of interest rates, as the Bank of Canada reduced its target for the overnight lending rate four times. The prime rate that banks use to set mortgage rates is now at 4.45 per cent.
The Royal LePage report notes that, after an 18-month rate-cutting cycle following two-decade-high interest rates, “the Bank has now shifted its focus to supporting a cooling economy while keeping inflation on a sustainable path.” It adds that economists widely expect the Bank of Canada will only make further cuts if the economy shows major signs of weakness as Canada continues to navigate trade tensions with the United States.
“Mortgage rates are no longer the villain in this story,” said Soper. “Borrowing costs have stabilized at a level that supports healthy market activity. Buyers can move forward without worrying they are missing out on cheaper money tomorrow. That clarity alone will unlock demand.”
In a survey conducted this summer , Royal LePage found that, of renters who were holding off on buying a property, 40 per cent said they were waiting for housing prices to fall, while 29 per cent said they were delaying until interest rates declined.
Outside of Toronto and Vancouver, every major market is expected to see an increase in home prices, although in each case it will be driven more by single-family detached dwellings, where the price hike will outstrip that for condos.
In Quebec City, for instance, the overall expected rise of 12 per cent was driven by a five per cent increase in condo prices but a 14 per cent rise in detached homes. In Montreal, the overall rise of five per cent included a six per cent jump in detached homes and a more modest 2.5 per cent climb in condo prices. And in Halifax, an overall increase of two per cent comprised a four per cent rise in detached homes but a two per cent drop in condominium prices.
In other markets, Calgary and Winnipeg are forecast to see the smallest jump in prices, at 1.5 per cent, followed by Edmonton and Ottawa (two per cent) and Regina at four per cent.
Soper applauded the government’s commitment to housing and infrastructure projects in the latest federal budget, but said it remained to be seen how those decisions would play out.
“If Ottawa follows through, 2026 could be the year we start to see long-promised initiatives turn into real progress for the Canadian real estate industry.” he said.
He added: “2026 will be a transition year for Canada’s housing market, as improved affordability and less competitive conditions continue to favour buyers. We expect activity to build slowly over the next several months, and if the spring market coincides with steadier economic and trade conditions, buyer confidence could strengthen in tandem.”
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