Real estate agency Royal LePage’s House Price Survey predicts Canadian home prices should remain stable throughout the rest of 2023.
At the same time, the national aggregate home price decreased by 0.8 percent, indicating many Canadians have adjusted to the increased cost of borrowing despite elevated interest rates continuing to impact market activity.
Phil Soper, president and CEO of Royal LePage, says with slowing activity and home prices softening in major markets across the country over the last three months due to a stronger-than-expected second quarter, that prices will “remain up on a year-over-year basis, with today’s stable market standing in sharp contrast to the steep declines experienced in the third quarter of 2022.”
Originally, Royal LePage had previously forecast the aggregate price would finish the year 8.5 percent higher than the end of 2022.
Compared to the spike in property values reached during the pandemic-related real estate boom, the aggregate price of a home in Canada remains 6.3 percent below the peak reached in the first quarter of 2022.
The greater Toronto and Vancouver regions posted declines from last quarter of 2.8 and 1.8 percent respectively, while more than half (57 percent) of regional markets in the report posted a quarter-over-quarter decline in Q3 as activity softened.
“Slower activity has allowed critically low inventory levels to build marginally in many regions, yet the quantity of homes available for sale in this country remains well below the level needed to keep a lid on property price increases,” Mr. Soper said.
Mr. Soper believes the growth of households will outpace the current rate of new home construction.
While trading volumes in a majority of regions are set to remain sluggish, he feels the housing market is on solid footing with pent-up demand building.
“We don’t anticipate a material change in property prices through the remainder of the year,” Mr. Soper said.
Across Canada, Royal LePage downgraded its end-of-year forecasts for Greater Toronto, Edmonton, and Regina while the company maintained its previous forecasts for other major areas such as the greater Vancouver and Montreal regions as well as Halifax, Ottawa, and Winnipeg.
Calgary is the only market expected to see price increases greater than previously forecast as the city’s aggregate home price is now predicted to finish the year 9.5 percent higher than the same quarter in 2022.
The city had the highest price increase across Canadian major markets over the last quarter at 1.8 percent.
While prices continue to look fairly stable, Mr. Soper believes elevated interest rates due to the Bank of Canada’s inflation-targeting rate hikes will have an impact on the real estate market despite Canadians adjusting to the increased rate of borrowing.
“Once interest rates begin to ease, even by only a small amount, we expect buyers will return to the market in large numbers and the relentless upward march of home prices will begin again,” Mr. Soper said.
Ottawa has been under increasing pressure over the past months as the ever-increasing cost of owning a home has become a hot topic and as inflation and high interest rates persist.
This increases the GST Rental Rebate from 36 percent to 100 percent and removes the existing GST Rental Rebate phase-out thresholds for purpose-built rental housing projects.
Mr. Soper endorsed the recent announcement, saying it was “a step in the right direction.”
“We believe this will have a material impact on housing affordability for Canadians, especially in the greater regions of Toronto and Vancouver, where average rent prices have skyrocketed in recent years,” said Mr. Soper.
