As we enter 2025, homeowners in Ontario and the broader Canadian market are keenly interested in the trajectory of residential HVAC (Heating, Ventilation, and Air Conditioning) prices. Understanding the factors influencing these costs is essential for making informed decisions about upgrading or installing systems such as furnaces, heat pumps, and air conditioners.
Here, we provide our forecast based on industry trends, as well as actionable tips so your family can save the most money on new HVAC costs this year.
Factors Influencing HVAC Prices in 2025
1. Regulatory Changes and Environmental Policies
Environmental policies have been a driving force behind price increases in the HVAC sector. Key regulations, like the phaseout of R-410A refrigerants in favour of eco-friendly alternatives such as R-32 or R-454B, have prompted manufacturers to redesign systems. These changes result in increased production costs, which are passed on to consumers.
For example:
- Refrigerant Transition Costs: The move to environmentally safer refrigerants increases the cost of HVAC units by 10–15%.
- Energy Efficiency Standards: Stricter efficiency requirements lead to the production of more advanced (and expensive) components.
These regulations aim to reduce the environmental impact of HVAC systems but come with a price premium for homeowners.
2. Supply Chain Dynamics
The global supply chain is still recovering from disruptions caused by the COVID-19 pandemic and geopolitical tensions. Factors such as material shortages, increased shipping costs, and higher labour expenses have resulted in more expensive manufacturing processes.
- Metal Prices: The cost of aluminum, steel, and copper—essential components in HVAC systems—remains high, directly impacting equipment pricing.
- Component Shortages: Semiconductors and specialized parts used in smart HVAC systems are in limited supply, delaying production and increasing costs.
- Shipping Costs: Land, sea and air transportation costs have been on the rise since 2020.
3. Advancements in Technology
While technological innovations improve energy efficiency and user experience, they also elevate costs. Systems with features like variable-speed compressors, AI-driven diagnostics, and smartphone integrations are more expensive to produce.
- Heat Pumps with Smart Controls: Heat pumps now come with Wi-Fi-enabled controls and energy monitoring systems, increasing initial costs but saving energy in the long run.
- Smart Thermostats: Many HVAC systems are now compatible with smart thermostats, which add an extra layer of cost but improve home comfort and efficiency.
- Enhanced Insulation Materials: Advanced insulation options are available, which may raise upfront expenses but significantly reduce heating and cooling costs over time.
4. Market Demand and Housing Trends
The demand for residential HVAC systems is closely tied to housing trends. Canada’s growing population and new developments drive demand for efficient heating and cooling solutions.
- New Construction: Builders are incorporating HVAC systems into new homes, which often feature energy-efficient and environmentally friendly designs.
- Renovation Projects: Many homeowners are upgrading older systems to comply with modern efficiency standards, increasing demand for premium products.
Price Forecasts for Residential HVAC Systems
Furnaces
Furnace prices are expected to increase slightly due to updated energy efficiency standards. High-efficiency models, such as condensing furnaces with AFUE ratings above 90%, remain popular but come with higher upfront costs. However, these models provide long-term savings through reduced energy bills.
Air Conditioners
Air conditioners will see moderate price hikes as manufacturers transition to eco-friendly refrigerants. Single-stage models remain the most affordable option, but variable-speed units, which offer better comfort and efficiency, are trending upward in cost.
Heat Pumps
Heat pumps are becoming a preferred choice for homeowners due to their dual heating and cooling capabilities and government rebates. Cold climate heat pumps, designed to function efficiently even in Canadian winters, are in high demand. However, their prices are expected to rise due to advanced technology and regulatory compliance. However, provincial and federal incentives may continue to offset some of these costs.
Government Rebates and Their Impact on HVAC Pricing
Government incentives play an important role in countering rising HVAC costs. Here’s how they might influence your 2025 HVAC purchase:
Federal Programs
The Canada Greener Homes Initiative offers interest-free loans of up to $40,000 for energy-efficient retrofits, including HVAC upgrades.
Under the same initiative, the Oil to Heat Pump Affordability Program also assists eligible homeowners with median income or less transitioning from oil heating:
- No home energy evaluation is required for program participation.
- Eligible homeowners can receive up to $10,000 for switching to an eligible heat pump system.
- An additional $5,000 grant is available in co-delivery provinces and territories.
- A one-time $250 incentive is offered for homeowners in co-delivery regions.
In addition, the Canadian Government has announced that The Canada Greener Homes Affordability Program is coming soon! This incentive aims to aid low-to-median-income homeowners and tenants in retrofitting homes for energy savings. We anticipate a 2025 go-live date for the affordability program.
Provincial Incentives
Programs like Ontario’s Home Efficiency Rebate Plus (HER+) provide homeowners with rebates for installing energy-efficient furnaces, heat pumps, and air conditioners. For instance, homeowners can receive:
- Up to $5,000 for insulation and air sealing
- Rebates for ENERGY STAR-certified HVAC systems
Tax Credits and Deductions
Some federal and provincial programs offer tax credits for installing qualifying HVAC equipment. These credits encourage homeowners to invest in energy-efficient technologies, reducing overall costs.
Why HVAC Prices May Not Decrease in 2025
Despite government incentives, several factors make a significant drop in HVAC prices unlikely:
- Higher Production Costs: Manufacturers face rising costs due to raw materials, labour, and compliance with new standards.
- Demand for Efficiency: Homeowners are increasingly prioritizing energy-efficient systems, which are more expensive upfront.
- Market Trends: Global inflation and supply chain challenges continue to affect pricing.
What Homeowners Should Do in 2025
To navigate the rising costs of HVAC systems, here are some practical steps we suggest for homeowners:
1. Plan Ahead
If your HVAC system is nearing the end of its lifespan, start researching replacements now. Early planning allows you to take advantage of current rebates and avoid further potential price hikes.
2. Invest in Energy Efficiency
High-efficiency systems may cost more upfront, but they offer significant savings on energy bills over time. Look for ENERGY STAR-certified models and systems with high SEER2 and AFUE ratings.
3. Consult Professionals
Work with a trusted HVAC provider to assess your needs and recommend systems that balance cost, efficiency, and performance.
4. Utilize Government Rebates and Tax Breaks Where Applicable
Take full advantage of federal and provincial programs to offset installation costs. Ensure you work with an HVAC contractor who is familiar with these incentives.
Conclusion: Our Predictions
HVAC prices in 2025 are likely to continue rising due to regulatory changes, supply chain challenges, inflation and tech advancements. However, government rebates and energy savings make upgrading worthwhile if your equipment is nearing the end of its lifespan.
Ready for an Upgrade?
While HVAC prices are unlikely to decrease significantly in 2025, proactive homeowners can make strategic decisions to minimize costs and maximize comfort. For expert advice on rebates and professional installation services, contact Arseneau Home Comfort today. Our team is dedicated to providing you with HVAC solutions that suit your family’s needs and budget.
