The real estate landscape across Australia, Canada, and the United States is experiencing a mix of optimism and caution as 2025 unfolds. Analysts are closely watching various economic indicators, including inflation rates and housing demand, to gauge the future of the housing market.
In Australia, the Real Estate Institute of Australia (REIA) has voiced optimism for prospective home buyers, largely due to recent Consumer Price Index (CPI) data and supportive fiscal policies. REIA president Leanne Pilkington noted that the annual CPI movement, excluding volatile items, rose by 2.7% in February 2025, down from 2.9% in January. This trend is seen as a positive sign for the housing market.
"The figures support market expectations of further rate cuts during 2025 which would provide additional relief for borrowers following the cut in February and improve affordability," Pilkington stated. This optimism is further supported by a 4% increase in overall mortgage demand, as reported by Equifax, following the Reserve Bank of Australia's (RBA) rate cut. There was also a notable 24% rise in month-over-month mortgage applications, indicating a growing interest in home buying.
However, while housing costs rose by 1.8% and food and non-alcoholic beverages increased by 3.1%, the rental sector saw a deceleration in price increases, with rents rising by only 5.5% over the past year—the smallest annual increase since March 2023. This slowdown reflects increased vacancy rates across most capital cities, suggesting a shift in the rental market.
Meanwhile, in Canada, the luxury real estate market had a strong start in early 2025, with sales increasing in 75% of major markets. However, economic concerns such as looming US tariffs and stock market volatility have dampened activity in some of the highest-priced housing segments. According to RE/MAX Canada’s 2025 Spotlight on Luxury Report, smaller luxury markets like Saskatoon saw luxury home sales double compared to the previous year, while traditionally high-priced areas like Greater Toronto and Greater Vancouver recorded declines.
"Canadian homebuyers expressed solid enthusiasm for luxury real estate out of the gate in 2025," said Kingsley Ma, area vice president at RE/MAX Canada. However, he pointed out that the climate changed quickly amid increased political tensions between Canada and the US, which has fueled uncertainty in the market.
Despite these challenges, luxury condominiums have shown resilience, with Vancouver recording 15 sales above $3 million in early 2025, a significant jump from zero in the same period last year. The Greater Toronto Area (GTA) also saw 12 condo sales above $3 million, including five exceeding $5 million, marking a 9% increase from 2024.
On the other hand, the ultra-luxury segment is thriving, with seven properties sold year-to-date in the GTA priced above $7.5 million, including four exceeding $10 million. This segment's growth is fueled by a rising number of high-net-worth individuals in Canada, projected to increase from two million in 2023 to 2.4 million by 2028, according to UBS Group.
While short-term uncertainty has slowed some luxury homebuying activity, RE/MAX Canada emphasizes that strong underlying market fundamentals remain. Interprovincial migration and immigration continue to support luxury demand in cities like Calgary, Edmonton, and Halifax. "Despite some pullback in recent weeks, there is a thread of optimism in luxury housing markets across the country," noted Samantha Villiard, vice president of regional development at RE/MAX Canada.
Turning to the United States, pending-home sales have shown slight improvement, increasing by 2% in February 2025. However, on a year-over-year basis, pending transactions declined by 3.6%, with every region across the U.S. experiencing a drop in pending-home sales compared to last year. The Northeast and West saw month-over-month losses in transactions during February, while the Midwest and South reported growth.
The National Association of Realtors (NAR) forecasts mortgage rates to average 6.4% in 2025 and 6.1% in 2026, with existing-home sales expected to rise by 6% in 2025 and accelerate another 11% in 2026. The new-home sales market is anticipated to rise by 10% in 2025 and another 5% in 2026. Additionally, the national median home price is predicted to increase by 3% in 2025 and 4% in 2026.
As the housing markets in Australia, Canada, and the United States navigate through these mixed signals, the overarching theme remains one of cautious optimism. With supportive fiscal policies, a growing population of high-net-worth individuals, and a potential recovery in luxury segments, 2025 may yet prove to be a pivotal year for home buyers and sellers alike.
Ultimately, the real estate landscape is shifting, influenced by both local and global economic factors. As market conditions evolve, stakeholders are urged to stay informed and adaptable to seize opportunities in this dynamic environment.
