Canada’s housing market suffers largest price decline among major economies, says BIS

A 'new price' sign outside a home for sale in Vancouver, B.C. Photo by Paige Taylor White/Bloomberg files

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House prices in Canada, adjusted for inflation, fell five per cent in the third quarter from a year earlier, said a new report from BIS, which is the bank for 63 global central banks.

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China also experienced a five per cent decline, while prices in Finland fell four per cent. Other countries that experienced residential price declines include New Zealand, Israel, Romania, Austria and Hong Kong.

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Overall, inflation-adjusted prices were “stable” in advanced economies, BIS said.

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Looking past the quarterly data, home prices in Canada plummeted 18 per cent in nominal or actual money terms from the first quarter of 2022 to the third quarter of 2025, outpacing a 17.8 per cent decline in China during the same period, BIS data showed. South Korea had the third-largest decline at 6.8 per cent, followed by a 6.2 per cent decline in Germany and a six per cent decline in Sweden.

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Home prices in the United States and the United Kingdom rose 12.3 per cent and 8.9 per cent respectively.

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“Canada is still in the grip of one of the deepest housing downturns in the advanced world,” Karl Schamotta, chief market analyst at Corpay Currency Research, said in a note to clients, referencing the BIS data. “After spectacularly outsized gains before and after the pandemic, home prices have fallen more sharply than in peer economies and are showing little sign of stabilizing.”

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Canadian home prices were up nearly 50 per cent since 2010, just after the great financial crisis to the third quarter of 2025, but are down since the fourth quarter of 2019, prior to the start of the pandemic, BIS said.

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The first quarter of 2022 marked the peak and the beginning of the end for the pandemic housing craze in Canada. At the time, the Bank of Canada began an unprecedented rate-hiking campaign, with rates rising to five per cent from 0.25 per cent, sapping a sector that had just set a record for the national average price.

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From then to the latest January housing numbers, national prices are down 19 per cent, said Robert Kavcic, an economist at BMO Economics.

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Other more recent data on the Canadian housing market reinforces that the frenzied days from the earlier part of the decade are over for now.

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For example, the housing market in 2025 “quietly” closed out, the Canadian Real Estate Association (CREA) said in a report last week. Sales for the year fell nearly two per cent and the composite price was down four per cent in December 2025 from the same time a year ago.

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Economist Rishi Sondhi at TD Economics said Canadian housing has been “subdued” since last August, with several factors at play, including economic and cost-of-living worries, weak population growth and a sluggish economy.

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“With these headwinds in place, another sub-par year for the Canadian housing market is likely on tap in 2026,” he said in a note.

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