The Canadian condo market remains a crucial part of the real estate landscape, particularly in Ontario, Alberta and British Columbia. In 2025, the condo sector faces both opportunities and unique challenges that require insight and strategic foresight. With significant inventory on the market, changing interest rates, and delayed new developments, the way forward is complex.
While Ontario is the hub for much of this activity, the ripple effects in B.C. and Alberta are already becoming apparent.
Impact of rate cuts and the supply challenge
The rate cuts so far, combined with signals of further reductions, offer potential upside for both the pre-construction and resale markets, but the current inventory surplus poses a more significant challenge.
Lower rates help open the door for more buyers, which is encouraging for the condo market’s significant inventory surplus. This surplus includes both resale units and pre-construction condos that were launched during the real estate boom of recent years, leading to an unprecedented supply level in today’s market.
How quickly we can work through this supply will depend on rate-cut momentum and the re-engagement of buyers in both the resale and pre-construction markets. The condo sector may see a gradual recovery in the resale segment, followed by low-rise units, with pre-construction inventory absorption picking up toward the end of 2025 and into 2026. This timeline requires the right conditions—favourable rates, economic stability, and sustained demand from end-users and investors.
A limited pipeline after 2026: potential price spikes and affordability issues
One of the most significant trends for the condo market is a pause on new pre-construction project completions beyond 2026. With inventory absorption expected to stabilize over the next year, the market will face a supply gap, as few new project construction starts in 2023 to 2025 will drastically impact the supply of completions from 2027 to 2029. This lull in new builds will likely create a constrained market where prices will surge once demand fully returns, creating affordability concerns that echo across Canada’s major cities.
In Ontario, and particularly Toronto, this limited future pipeline will impact price dynamics dramatically. Many buyers and investors are currently holding off due to the uncertain economic climate, yet as soon as the existing supply is absorbed, the demand will likely outstrip available inventory. In markets like B.C., which often mirror Toronto’s trends, we can expect similar patterns. With a scarcity of downtown inventory, suburban markets in both B.C. and Ontario are also likely to experience heightened demand and price appreciation, a pattern Alberta’s urban centres may see as well, albeit on a smaller scale.
The future of condo development: a look toward 2029
Beyond the immediate absorption phase, the market’s slowdown in new project launches suggests that the Canadian condo sector is preparing for a reset. As existing inventory is gradually absorbed, developers will be cautious with new launches, focusing on building only where there is clear demand and strong absorption. This intentional slowdown, while necessary, also means that by 2029 we may find ourselves in a very different market, one where affordability is even further strained.
The lack of new supply will drive up prices dramatically, impacting end-users and investors alike. As affordability wanes, rental markets will feel the pressure as well, which could lead to an overall housing crunch, especially in high-demand areas. Once inventory is constrained, prices are expected to increase steadily, reinforcing the importance of government intervention to reduce red tape and taxes to ease the pressure on developers.
Positioning for success amidst uncertainty
The combination of rate cuts and high supply has set the stage for a gradual recovery, but it is not without obstacles. Absorbing the current inventory requires strategic adjustments from developers and decisive action from policymakers.
For cities like Toronto, Calgary, and Vancouver, the challenges of high prices and limited new supply will only intensify without proactive measures to enhance affordability, increase supply, and balance suburban and urban growth. With fewer new development completions on the horizon until 2029, it is imperative that stakeholders collaborate to address the impending supply gap and affordability issues that will define Canada’s real estate landscape for years to come.
Through foresight and action, we can position Canada’s condo market for resilience. But it will take a coordinated effort among developers, government, and industry leaders to ensure that the market remains both viable and accessible for buyers.
Riz Dhanji is a pre-construction sales and marketing specialist at RAD Marketing.
