Canadian Property Market Hurt by Tariff Concerns

OTTAWA–The nascent recovery in Canada’s housing market has become a casualty of the trade dispute with the U.S.

The latest national home-resale data are due out Tuesday, but early indications from several big regional real-estate boards suggest March was overall another down month as many prospective buyers exercised caution.

The recent weakness in home sales has dimmed the previously brighter outlook for the property market coming into 2025, when buyers were encouraged by the Bank of Canada’s aggressive interest-rate cuts.

“The chills the U.S. trade war has sent through participants in the housing market are getting frostier,” said Robert Hogue , assistant chief economist at Royal Bank of Canada.

Hogue said resales are down materially in a number of markets two months running, and home prices in several markets are coming under pressure as inventories rise. And although Canada was spared additional levies when President Trump unveiled so-called reciprocal tariffs on dozens of countries earlier this month, no meaningful rebound is likely so long as trade uncertainty lingers, he said.

Home buyers in Toronto, Canada’s most populous city and the country’s financial hub, aren’t turning up for the usual spring pickup in property-market activity.

Sales in the Greater Toronto Area slumped 23.1% in March from a year earlier, as new listings for the region jumped close to 29%, according to the Toronto Regional Real Estate Board. That marked the worst month of resales since 1998.

The board’s chief information officer, Jason Mercer , said many potential home buyers were likely taking a wait-and-see approach given the economic worries as well as a pending federal election. “Homebuyers need to feel their employment situation is solid before committing to monthly mortgage payments over the long term,” he said, adding that ownership has become more affordable and prices in the area fell about 3.8% year on year in March.

Uncertainty is also weighing on the housing market in Calgary, the biggest city in oil-rich Alberta. The city’s real-estate board said realtors reported a 19% drop in sales of existing homes from last year, with a similar trend of improving supply and a sharp increase in the average number of days that homes were on the market.

On the West Coast, home sales registered in the metro Vancouver area of British Columbia were the lowest for March since 2019, falling 13.4% on a year earlier and coming in close to 37% below the 10-year seasonal average, while active listings continued to rise.

There are some areas of resilience. The Quebec Professional Association of Real Estate Brokers said total sales in the province were up 9% year on year in March. Still, RBC’s Hogue estimated Montreal sales in March were down about 15% from December seasonally adjusted, effectively rolling back the advance since the end of last summer.

The most recent national data for the country, from the Canadian Real Estate Association, showed resales dropped 9.8% month over month in February, when homebuyers may also have been put off by harsh winter storms in parts of the country. That marked the sharpest fall since May 2022 and brought the level of sales to their lowest level since November 2023, snapping signs that activity had been picking up in recent months.

Rishi Sondhi , an economist at Toronto-Dominion Bank, in a recent report estimated the country was tracking toward a double-digit quarterly decline in Canadian home sales and a mid-single-digit drop in Canadian average home prices for the first three months of 2025. That is much weaker than a pre-Trump inauguration forecast made in December that projected a loosening in federal mortgage rules, lower interest rates and continued economic growth would fuel a modest gain in sales and prices.

Central-bank officials are set to decide Wednesday on monetary policy, but they have signaled a cautious approach to rates as they balance the prospect of tariffs stoking price pressures against the likelihood that they will dampen demand and weigh on the economy. That could mean the Bank of Canada will pause after seven straight cuts to its policy rate.

Housing is a hot topic for party leaders campaigning ahead of the April 28 election, with both the incumbent Liberal Party and opposition Conservatives proposing tax cuts and incentives to encourage buyers and builders.

The outlook for new homes has also dimmed with the tariff threat. The value of residential-building permits issued in February fell 2.9% from a month prior, adding to a retreat in January that took back some of the surge in intentions in the final month of last year, Statistics Canada data last week showed.

Australia’s major CBD office markets are recording some of their strongest rental growth since the pandemic, with businesses increasingly prioritising premium office space despite elevated geopolitical and economic uncertainty.

Knight Frank’s Australian Office Indicators Q1 2026 report found net effective rents in Sydney and Melbourne CBDs rose at their fastest annual pace since COVID-19, increasing 10.2 per cent and 6.8 per cent respectively over the 12 months to March.

Brisbane posted the strongest growth nationally, with net effective rents climbing 11.7 per cent over the same period.

The report points to a widening divide between prime CBD office towers and secondary office stock, as occupiers increasingly focus on quality, location and workplace amenity when making leasing decisions.

Knight Frank Senior Economist, Research & Consulting Alistair Read said demand remained heavily concentrated in premium assets within core CBD precincts, helping drive stronger rental growth in top-tier buildings.

“Occupier demand continues to be heavily concentrated in the most desirable CBD precincts and the highest-quality buildings, accelerating a sharp divergence between core and non-core markets,” Mr Read said.

According to the report, Sydney’s Core precinct and Melbourne’s Eastern Core significantly outperformed broader CBD markets over the past year.

“In Sydney’s Core precinct and Melbourne’s Eastern Core, net effective rents surged 14.3% and 16.1% over the past year, significantly outperforming the rest-of-CBD precincts,” Mr Read said.

The rental gap between prime and non-prime office locations has also continued to widen sharply.

“As a result, core CBD rents are now 54% higher than non-core locations in Sydney and 93% higher in Melbourne, highlighting the growing premium placed on amenity, accessibility and workplace quality,” he said.

Knight Frank said the strong rental growth across the major CBDs was being underpinned by a limited supply pipeline, with few new office developments expected to be delivered in the near term.

Mr Read said subdued construction activity was likely to support ongoing rental growth and tighter vacancy rates over the medium term, particularly for premium office towers.

“The combination of sustained demand and declining levels of new development will aid ongoing prime rental growth and lower vacancy rates over the medium term, particularly for best-in-class assets,” he said.

The report noted that current economic conditions were making new office developments increasingly difficult to justify financially.

“Economic rents remain well above expected market rents, making the construction of new office towers largely unviable, and concentrating tenant demand into existing buildings,” Mr Read said.

While suburban office markets generally remained subdued compared with CBDs, Melbourne’s Southbank precinct was identified as a relative outperformer, recording annual net effective rental growth of 2.7 per cent.

The report comes as broader Asia-Pacific office markets continue to stabilise following several years of disruption linked to hybrid work trends, inflation and rising interest rates.

Knight Frank’s separate Asia-Pacific Q1 2026 Office Highlights report found Sydney and Brisbane were among the strongest-performing office rental markets in the region, behind only Bengaluru and Tokyo for annual prime net face rental growth.

The Asia-Pacific report also found 18 of the 24 cities monitored across the region recorded stable or increasing rents in the first quarter of 2026, even as geopolitical uncertainty intensified following escalating conflict in the Middle East.

Canadian Property Market Hurt by Tariff Concerns

Early indications from several big regional real-estate boards suggest March was overall another down month.

Office rents in Sydney, Melbourne and Brisbane are climbing at their fastest pace since the pandemic as tenants compete for premium CBD space amid tightening supply.