Canadian Real Estate Policy Changes 2025: Key Updates for Buyers, Sellers, Investors, and Professionals

Canada’s real estate landscape is undergoing significant transformation in 2025, marked by federal and provincial policy shifts, market volatility, and regulatory changes. These updates directly impact homebuyers, sellers, investors, and industry professionals. Below is a detailed summary of the most important changes, improvements, and timelines currently shaping the Canadian housing market.

GST Elimination for First-Time Homebuyers

Policy Announcement: On March 20, 2025, Prime Minister Mark Carney announced the elimination of the Goods and Services Tax (GST) on new or substantially renovated homes for first-time homebuyers, up to $1 million. This move can reduce purchase costs by up to $50,000, enhancing affordability and supporting Canadians entering the housing market.

Implementation Timeline: The government intends to introduce enabling legislation in spring 2025, with the goal of passing it before the end of the fiscal year.

Capital Gains Tax Stability for Canadian Real Estate Investors

Policy Announcement: On March 21, 2025, Prime Minister Carney confirmed the cancellation of a proposed increase to the capital gains inclusion rate. This decision was made to foster investor confidence and stimulate real estate development by maintaining existing tax incentives. The policy provides reassurance to investors already in the market and encourages new investment by preserving existing profit margins. It also supports the financing and planning of multi-year residential and mixed-use developments, which might have stalled under increased tax pressure. Overall, it maintains capital flow into the housing sector at a critical time.

Implementation Timeline: Effective immediately, this ensures continuity for developers and investors planning long-term projects.

BMO Mortgage Policy Adjustments

Announcement Date: March 21, 2025

Overview: In March 2025, BMO revised its mortgage policies for clients working in high-risk sectors such as steel and aluminum, reducing the total debt service ratio from 44% to 42%. Similar restrictions apply to utilities, construction, and transportation.

Purpose and Benefits: While borrowing capacity is reduced for certain industries, this move is intended to enhance financial stability and reduce default risks. For borrowers in lower-risk sectors, it may ease competitive pressures and improve qualification odds. These adjustments, while restrictive for some borrowers, are designed to enhance financial stability in high-risk sectors. By tightening lending standards in volatile industries, BMO aims to minimize defaults and protect both customers and the broader financial system. For buyers in more stable sectors, these changes may reduce competition and improve qualification odds.

Bank of Canada Interest Rate Cuts

Overview: As of March 2025, the Bank of Canada maintains its key interest rate at 2.75% following a series of cuts initiated in late 2024 to stimulate economic activity amid slowing growth and housing market concerns.

Outcome: Lower rates present an opportunity for first-time buyers to enter the market with reduced borrowing costs, particularly when combined with new tax incentives. Developers and investors also benefit from improved project financing conditions. Additionally, those refinancing variable-rate mortgages may see relief on monthly payments, supporting broader household spending and stability. While lower rates improve borrowing capacity, high household debt levels and elevated mortgage renewal payments may limit market momentum.

Condominium Supply Constraints

Update: Pre-construction sales for one- and two-bedroom condos have slowed drastically, especially in Toronto, due to rising costs and weak investor appetite.

Implication: Lack of presales hinders project financing, delaying much-needed housing supply and worsening the ownership gap.

Recent Incentives: To address this issue, the federal government has extended funding under the Apartment Construction Loan Program (ACLP), offering low-cost financing to developers building rental apartments, including condos. In addition, the Canada Infrastructure Bank (CIB) is supporting large-scale rental housing projects with long-term capital. Several provinces, including Ontario and British Columbia, have introduced development charge deferrals and fast-tracked approval processes for mid- and high-density condo developments.

Federal Housing Accelerator Fund

Program Overview: The federal government’s $4-billion Housing Accelerator Fund, launched in 2023, continues to be a central tool in 2025 to stimulate housing development. Recent updates to the program in February 2025 introduced streamlined application processes and expanded eligibility criteria to include more small- and mid-sized municipalities. These enhancements aim to accelerate shovel-ready projects and enable faster delivery of affordable and market housing.

Where to Learn More: Visit the official CMHC page for program details, eligibility, and application guidelines: https://www.cmhc-schl.gc.ca/en/professionals/project-funding-and-mortgage-financing/funding-programs/all-funding-programs/housing-accelerator-fund

Provincial Policy Changes

Ontario – More Homes Built Faster Act (Bill 23): As of 2025, Ontario continues implementing reforms from Bill 23 that aim to accelerate housing supply through streamlined approvals and upzoning for multi-unit developments. These changes are intended to directly address current housing shortages and affordability pressures.

British Columbia – Zoning and Tax Reforms: BC expanded its Speculation and Vacancy Tax in January 2025 to 13 more communities and implemented province-wide zoning changes in urban areas to allow multi-unit housing on previously single-family lots. These updates are focused on increasing supply and reducing speculative ownership.

Alberta – Development Incentives: Alberta has fast-tracked approvals and introduced cost-saving incentives such as deferred development charges for mid- and high-density residential construction. These are designed to speed up new housing starts in 2025 to meet growing demand.

Alberta – Foreign Buyer Ban & Savings Incentives: As of 2025, Alberta continues to enforce a foreign buyer ban covering most residential properties. The province also promotes homeownership through the federally supported First Home Savings Account (FHSA), which remains active and accessible to eligible first-time buyers. These measures are designed to prioritize housing access for residents and improve affordability during a period of rising demand.

Quebec – Transparency Requirements: In 2025, Quebec is enforcing stricter beneficial ownership disclosure in real estate transactions to curb illicit investment practices and increase consumer confidence, indirectly improving market fairness and affordability.

Conclusion

Industry experts and economists are responding to 2025 policy changes with cautious optimism. Lower interest rates are expected to spur investor activity, and capital is already shifting back into real estate. Christopher Wein, COO of Equiton Developments, stated, "We're seeing a significant increase in investor confidence as financing becomes more accessible."

Economists at Royal LePage forecast a 6% home price increase by Q4 2025, emphasizing that "market fundamentals remain strong in key regions despite broader economic volatility." Meanwhile, Bank of Canada Governor Tiff Macklem acknowledged that reduced immigration targets could "moderate GDP growth," but noted that rate cuts may help "support domestic economic expansion."

Analysts at RSM Canada advise that real estate professionals must adopt adaptive strategies: "The ability to navigate uncertainty with flexibility is critical in this evolving landscape." Overall, these expert insights reinforce that while structural challenges remain, the policy shifts in 2025 lay necessary groundwork for a more stable, investor-friendly market.

From new tax incentives and affordability programs to zoning reforms and financing tools, 2025 is shaping up to be a pivotal year for Canadian real estate. While challenges remain, recent changes are creating real opportunities for buyers, sellers, and investors alike.

Staying informed and proactive can position all market participants to benefit from a more accessible, dynamic market environment in 2025 and beyond. For expert guidance on navigating the latest developments and connect with top-rated real estate agent and real estate professionals, visit Pro Search today.

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