Rate cut expected to lift confidence, but affordability challenges remain

The February rate cut, the first since November 2020, is expected to boost consumer confidence and inquiries, though sustained sales improvements will require further cuts.

Sales in Q4 2024 rose 20% year-on-year, but affordability and high construction costs remain barriers. Incentives like rebates and grants have supported demand, but haven’t fully offset rising costs. Titled land, benefiting most from incentives, made up 60% of sales but took a record 186 days to sell, reflecting affordability challenges. Buyer demographics are shifting, with upgraders and downsizers driving sales, pushing the median lot price past $400,000.

Regional markets, however, are recovering stronger, thanks to their affordability edge and renewed developer confidence. Greenfield townhomes are gaining attention as a promising investment. While the rate cut is a positive sign, lasting growth will depend on multiple reductions to ease affordability constraints.