MARCH 2026
Canada’s GDP declines in fourth quarter of 2025 By Tony Irwin, President and CEO, RHC
Canada’s real gross domestic product (GDP) contracted unexpectedly at an annualized rate of 0.6% in the fourth quarter of 2025, the slowest annual growth rate since 2020. The overall growth rate for 2025 was 1.7%, which is in line with Bank of Canada expectations. According to Statistics Canada data, the main reason for this contraction was that manufacturers dipped more heavily into their inventories rather than producing new goods. Exports (particularly to the U.S.) also declined during this period. Looking ahead, the Bank of Canada projects Canada’s real GDP to grow by just 1.1% in 2026, which would make it one of the weakest years in recent decades outside of a recession.
Will interest rates rise or fall? In the short term, it appears the Bank of Canada will hold the policy interest rate at 2.25%. There are no expectations to change the interest rate in the short term. Modest increases of 0.25% per year are expected starting in 2025, although this may change should there be significant shifts in inflation or other factors. On March 3, the Standing Committee on Finance launched its pre-budget consultations in advance of the 2026 budget. Written submissions can be submitted to the committee until Thursday, April 30, 2026, at 11:59 p.m. (ET). RHC will consult with the membership to ensure our submission accurately reflects current concerns and recommendations that will support the rental housing industry.
How will this affect the housing market? The GDP slowdown feeds directly into housing demand and construction in several ways: • The CMHC expects buyer demand to remain below historical averages, due to higher price-to-income ratios, high carrying costs, and job uncertainty preventing homebuyers from entering the market. • The national average home price fell to $652,941 in January 2026, down 2.6% year-over-year; the national benchmark fell for the eighth consecutive month. Home sales were down 12.5% compared to the previous year. Annual benchmark price declines fell the most in Ontario (-7.0%) and British Columbia (-4.9%), while Atlantic Canada, Quebec, and Saskatchewan experienced gains.
rentalhousingbusiness.ca | 35