Canadian real estate prices surged after rate cuts, and have generally cooled since rates began to normalize. Canadian Real Estate Association (CREA) data shows the composite benchmark, which represents a typical home, ripped higher after rate cuts in March 2020 and peaked when rates began to normalize in 2022. A big exception is Eastern Canada, where home prices didn’t just see the largest increase after rate cuts. They only saw a minimal correction when rates began climbing, retaining the title of frothiest growth across the country.
Canadian Real Estate Prices Have Given Up Substantial Gains
First let’s get some market context by looking at the national composite benchmark. Canadian real estate prices peaked in March 2022 with a typical home hitting $855,800, an increase of 54.8% since rate cuts began in March 2020. Since then, home prices have corrected and prices remain 32.0% higher than where they started, with a benchmark price of $729,700 as of March 2024.
Quite the rollercoaster ride for just a 2 year window—peaking exactly two years ago, and then cutting that growth significantly over the next two years.
Eastern Canadian Provinces Retained Frothy Home Price Growth
The percent change in price for a composite benchmark (typical) home across Canadian provinces since March 2020, when interest rates were initially cut.
Source: CREA; Better Dwelling.
Eastern Canadian provinces generally saw the frothiest growth across the country. From March 2020 to their respective peak, home prices launched the most in Nova Scotia (+71.7%), New Brunswick (+70.3%), and PEI (+66.1%). These markets all peaked shortly after rates began to rise, within 3 months of the first hike in 2022.
Only four provinces outperformed the national growth when it was at its peak rate, and three were on the East Coast. It’s also worth noting after the first rate hike, credit would not have taken a significant hit, so the probability this was exuberance driven is very high, not unlike the jolt it delivered to Ontario’s cottage country.
Eastern Canada Home Prices Have Retained Frothy Growth Since Rate Cuts
The percent change in composite benchmark price from March 2020 to peak in each province vs the change to March 2024.
Source: CREA; Better Dwelling.
While virtually every market is off the peak, Eastern Canada still leads for growth. Looking beyond the record highs, From March 2020 to March 2024—the same three provinces retain the title of highest price growth, just re-ordered. Topping the list is New Brunswick (+69.4%), followed by Nova Scotia (+60.4%), and PEI (+59.3%). Not much of a correction was observed in the provinces. At least for now.
Canada’s two most expensive markets had a very different story over the past 4 years. From 2020 to peak, Ontario (+64.4%) outperformed the national benchmark. While BC (+51.6%) slightly underperformed over this period, it remains Canada’s most expensive market.
Unlike Eastern Canadian provinces, these markets saw a big pullback as rates normalize. As of March 2024, the growth from 2020 was cut significantly in both Ontario (+35.2%), and BC (+37.5%). Though it’s worth remembering that Ontario is the only province to have seen a double-digit rate of correction as of this point.
Most people think of pricey places like BC and Ontario when they think of frothy growth, not Eastern Canada. It’s hard to say whether the region’s price growth is justified, but it does resemble what experts refer to as “bubble contagion.”
This is when a region begins to command higher and higher prices based solely on being more affordable. Bubbles tend to dismiss issues like income growth and amenities, but instead focus on exuberant buyers (and investors) trying to purchase whatever they can finance.
