Regional Divergence in Canada’s Housing Market: Prairies & Atlantic Gain Strength as Toronto Slows

Canada’s housing market is no longer moving in one direction. While national averages show modest price declines and softer sales, new data highlights a clear regional divergence. Markets in Toronto and Vancouver are cooling sharply, but the Prairies and Atlantic Canada are showing surprising strength.

This uneven housing landscape carries important implications for mortgage borrowers, lenders, and policymakers as the Bank of Canada considers its next moves.

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The National Backdrop

Across the country, MLS® home sales slipped 2% year-over-year in the first half of 2025, with average prices dipping to C$668,000. Rising interest rates and affordability challenges are dampening activity in key urban centers, particularly Ontario and British Columbia.

But these headline numbers mask deeper contrasts. Some provinces are bucking the cooling trend.

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The Prairie Boom: Spotlight on Saskatchewan

Saskatchewan has emerged as one of Canada’s fastest-growing real estate markets:

• Sales Growth: Home sales in June 2025 surged 6% year-over-year, defying the national slowdown.
• Price Increase: Average home prices rose to C$370,700, an 8% gain compared to 2024.
• Low Inventory: Supply remains tight, adding upward pressure on prices despite higher borrowing costs.

Analysts suggest Saskatchewan’s relative affordability, combined with a diversified resource economy, has insulated it from the sharper downturns seen elsewhere.

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Atlantic Canada Holds Strong

Markets in Newfoundland and Labrador are also outperforming national averages:

• Prices have climbed steadily in 2025, supported by interprovincial migration and sustained demand from younger buyers.
• Sales activity remains healthy, with fewer signs of slowdown compared to Ontario and B.C.

Atlantic affordability, coupled with lifestyle appeal and remote-work flexibility, continues to attract buyers priced out of larger cities.

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Toronto and Vancouver: The Sharp Cooldown

By contrast, Canada’s largest urban markets are bearing the brunt of high rates and tighter credit conditions:

• Toronto: Condo prices have dropped by as much as C$150,000 from their peaks, triggering concerns among investors and landlords.
• Vancouver: Detached housing demand has softened, with fewer international buyers entering the market due to ongoing restrictions.

For borrowers in these regions, the combination of high mortgage renewal costs and falling equity values creates heightened financial pressure.

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Why the Divergence?

Several structural factors explain this growing regional divide:

• Affordability Gap: Prairie and Atlantic markets remain comparatively affordable, leaving more room for growth.
• Economic Drivers: Energy and resource industries in the Prairies are supporting incomes and employment.
• Demographics & Migration: Atlantic provinces benefit from a mix of immigration and interprovincial migration driven by affordability and lifestyle.
• Investor Confidence: Ontario and B.C. are cooling as investor sentiment weakens amid falling condo values and higher carrying costs.

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Implications for Mortgage Borrowers

1. Prairies & Atlantic Buyers: Stronger demand could lead to competitive offers and less bargaining power, even in a high-rate environment.
2. Ontario & B.C. Borrowers: Renewals and refinancing are riskier, with falling property values affecting equity positions.
3. Investors: Regional strategies matter more than ever; success in Saskatchewan or Newfoundland may contrast sharply with struggles in Toronto.

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Expert Views

• “We’re seeing a tale of two markets: weakness in major urban centres, resilience in mid-sized and affordable regions.” — RE/MAX Canada
• “Toronto’s slowdown is investor-driven, while Prairie and Atlantic markets are fuelled by genuine end-user demand.” — RBC Economics

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Why This Matters

This divergence underscores a critical reality: Canada’s housing market cannot be viewed through a single lens. The days of uniform price surges are gone. Instead, local economics, demographics, and affordability are dictating outcomes.

For policymakers, it highlights the challenge of setting national monetary policy that impacts very different regional realities. For borrowers, it underscores the need for localized mortgage strategies tailored to their specific markets.

Canada’s housing story in 2025 is one of contrasts: condos losing value in Toronto while homes in Saskatchewan gain momentum. For buyers, sellers, and mortgage borrowers, recognizing these regional differences is key to making informed decisions in a shifting market.