Rebalanced Canadian Economy Supports Healthy Real Estate Markets Across the Country
Stability in real estate market provides safe haven for savers facing volatile capital markets
Sector remains a federal election priority for major parties and voters
TORONTO, October 14, 2015 – In the third quarter of 2015, home prices showed moderate to strong year-over-year increases in most markets in Canada, according to the Royal LePage House Price Survey¹ released today. While the effects of the crude oil shock are still filtering through the economy, the country’s non-energy sectors are beginning to regain momentum as a lower Canadian dollar stimulates sharply higher exports, particularly to the U.S., supporting overall consumer confidence and the strength of Canada’s real estate markets.
According to the report and newly introduced Royal LePage National House Price Composite, comprising house values in 53 of the nation’s largest real estate markets, the price² of a home in Canada increased 8.0 per cent year-over-year to $502,643 in the third quarter. The price of a two-storey home rose 9.9 percent year-over-year to $615,304, and the price of a bungalow increased 6.8 per cent to $421,757. During the same period, the price of a condominium increased 2.7 per cent to $338,945.
“Economic slowdowns in energy-dependent markets, most notably in western Canada, have in part been offset by both renewed industrial activity in other parts of the country and the Bank of Canada’s recent interest rate cuts,” said Phil Soper, chief executive officer, Royal LePage. “In line with recent quarters, strong national home price increases are largely being driven by continued double-digit percentage increases in the Greater Toronto Area and Greater Vancouver, where housing affordability is already becoming a growing challenge for many individuals and families.”
“Unlike the economic results seen in recent years, 2015 has been positive for Ontario, resulting in strong consumer confidence and increased housing market activity,” continued Soper. “The strength of the U.S. economy coupled with a lower Canadian dollar has greatly increased sales in Ontario’s manufacturing and services export industries. Domestically, rising economic fortunes, underpinned in part by higher residential real estate values, provide consumer-driven support for a wide range of industries, from financial services to the auto sector, further sustaining economic momentum and housing demand in a number of Ontario regions.”
In the third quarter, Greater Toronto Area (GTA) home prices saw an aggregate year-over-year increase of 11.3 per cent across housing types surveyed, to a price of $612,261, while the price of a home in the City of Toronto climbed 11.2 per cent to $639,970. In a few cases, house prices in Toronto’s suburbs are outpacing those in central parts of the city. During the quarter, the median price of a standard two-storey home in Richmond Hill and Vaughan increased 18.6 per cent year-over-year to $963,561 and 18.0 per cent to $842,173, respectively, while the price in Toronto rose 17.1 per cent to $961,656.
“As homes in legacy central Toronto neighbourhoods move increasingly out of reach, we are observing that the more affordable areas in Southern Ontario, including the GTA suburbs, are experiencing substantial price appreciation and heightened sales activity levels,” said Soper.
Over the same period, British Columbia’s Lower Mainland region continued to see exceptional house price increases, with the price of a home in Greater Vancouver rising 12.9 per cent year-over-year to $928,532. As with Toronto, house price increases in some surrounding areas outpaced those in the city core. A notable difference is that these prices are now in excess of $1,000,000. The median price of two-storey homes in the cities of Richmond and Burnaby saw year-over-year increases of 23.5 per cent to $1,200,462 and 20.9 per cent to 1,184,385, respectively, while the price of a two-storey home in the City of Vancouver increased 17.3 per cent to $1,925,491. Meanwhile, the median price of a standard two-storey home in North and West Vancouver increased to $1,267,113, and $2,775,782, respectively.
“Overall, economic growth in British Columbia, in conjunction with migration into the province, continues to drive local housing activity. We expect this to continue through the balance of 2015,” said Soper. “Interestingly, so far in 2015, Vancouver job growth has not kept up with the leading regions of the country, which is at odds with the level at which its housing market is appreciating. This disconnect could reflect an inflow of retired homebuyers, but it also lends some credibility to the argument that housing in this market is being influenced by international buyer activity.”
After years of outpacing the rest of the country, Regina and St. John’s home price increases are now firmly below the national average, but are remaining stable. Calgary and Edmonton’s housing markets continue to hold firm, maintaining stability amid continued economic uncertainty. Regions in Atlantic Canada are showing mixed results, with a clear exception in Halifax which is showing healthy year-over-year price increases in most housing categories surveyed. Meanwhile, balance appears to be returning to major Quebec housing markets, as the lower Canadian dollar supports the province’s manufacturing and export sectors.
“Home ownership remains a bright light amid unsettled investment and savings options in volatile global capital markets. As we lead up to election day, it’s not surprising that all of the major political parties are acknowledging the housing sector’s prominence as the foundation on which the economy has been built for years, and a critical foundation upon which Canadians can build their savings,” concluded Soper.
Beginning this quarter, Royal LePage’s House Price Survey includes the Royal LePage National House Price Composite comprising house values for 53 of the nation’s largest real estate markets through the use of a proprietary, custom-built system that analyzes a housing database containing millions of real estate transactions. The enhancements are made possible through Royal LePage’s collaboration with its sister company, Brookfield RPS, a leader in residential real estate data and analytics in Canada.
Regional Market Summaries
Weakness in the energy sector kept St. John’s homebuyers on the sidelines in the third quarter which saw the aggregate price of a home in the region rise only slightly by 1.0 per cent to $340,261. The median price of a two-storey home rose a modest 0.8 per cent year-over-year to $382,462, while the price of a bungalow increased 1.8 per cent to $318,470. Over the same period, the price of a condominium fell 3.4 per cent year-over-year.
Halifax saw healthy year-over-year price increases across all housing types surveyed in the third quarter of 2015. The aggregate price of a home in the region rose 4.1 per cent to $313,178. Halifax saw the most significant year-over-year growth in the condominium median price, which rose 12.4 per cent to $309,958. In the same period, the median price of a two-storey home increased 4.4 per cent year-over-year to $355,114, while bungalows rose 1.2 per cent to $241,803.
The Greater Montreal Area saw moderate increases in the third quarter of 2015, with the aggregate price of a home increasing 2.2 per cent year-over-year to $337,060. Central Montreal by comparison saw healthier price appreciation with a 4.2 per cent aggregate home price increase to $411,513 in the same period.
In spite of a looming election, the Ottawa housing market remained relatively active when compared to past election years. The aggregate price of a home in the region saw a slight decline of 0.3 per cent to $386,295. The median price of a two-storey home remained unchanged year-over-year at $404,153. Yet, during the same period, the median bungalow price saw a moderate increase of 1.7 per cent to $386,244, and the price of a condominium fell 6.8 per cent to $289,396.
The Greater Toronto Area (GTA) saw price increases in some suburbs outpace the Toronto core with the aggregate price of a home in the GTA rising 11.3 per cent over the year prior to $612,261. Meanwhile, the Toronto core saw a similar increase of 11.2 per cent to $639,970 in the same period.
An upswing in the manufacturing industry maintained a balanced housing market in Winnipeg as the aggregate price of a home increased 3.6 per cent yearover-year to $302,338. The median price of a two-storey home rose 4.1 per cent to $371,943, and the median price of a bungalow increased 3.4 per cent year-over-year to $273,636. During the same period, condominiums saw more modest appreciation of 1.3 per cent to $228,923.
The Regina housing market continued to favour buyers as a result of overbuilding, with the aggregate price of a home in the region declining 2.2 per cent to $324,606. The median price of a bungalow declined 3.0 per cent year-over-year to $298,839, while the price of a condominium fell 5.2 per cent year-over-year to $250,879. During the same period, the median price of a two-storey home remained relatively flat, increasing 0.3 per cent year-over-year to $423,917.
The Calgary housing market continued to weather the energy downturn due to a diversifying economy with the aggregate price of a home rising 0.8 per cent to $465,374. Broken out by housing type, the median price of a two-storey home increased 1.0 per cent on a year-over-year basis to $522,052, while the median price of bungalows saw a small drop of 0.4 per cent to $451,937. During the same period, condominiums saw a moderate increase of 3.0 per cent to $310,665.
Migration into the market supported residential real estate demand in Edmonton with the aggregate home price in the city rising 4.1 per cent to $389,174. As buyers returned from their employment in the oil and gas sector up north, the median price for a two-storey home increased 5.6 per cent year-over-year to $465,247, while the median price for condominiums increased 4.1 per cent to $244,534. During the same period, bungalows recorded a year-over-year price growth of 1.9 per cent to $370,989.
Greater Vancouver saw double-digit increases in the third quarter as the market continued to be driven by a strong B.C. economy. The aggregate price of a home in Greater Vancouver rose 12.9 per cent year-over-year to $928,532, while central Vancouver saw the aggregate home price increase 15.6 per cent in the same period to $1,097,726, primarily as a result of competition in the two-storey and bungalow categories.
The aggregated regions and markets comprising the report are provided in this chart. (.PDF)
About the Royal LePage House Price Survey
The Royal LePage House Price Survey provides information on the three most common types of housing in Canada, in 53 of the nation’s largest real estate markets. Housing values in the House Price Survey are based on the Royal LePage National House Price Composite, produced quarterly through the use of company data in addition to data and analytics from its sister company, Brookfield RPS, the trusted source for residential real estate intelligence and analytics in Canada. Commentary on housing and forecast values are provided by Royal LePage residential real estate experts, based on their opinions and market knowledge.
About Royal LePage
Serving Canadians since 1913, Royal LePage is the country’s leading provider of services to real estate brokerages, with a network of over 16,000 real estate professionals in more than 600 locations nationwide. Royal LePage is the only Canadian real estate company to have its own charitable foundation, the Royal LePage Shelter Foundation, dedicated to supporting women’s and children’s shelters and educational programs aimed at ending domestic violence. Royal LePage is a Brookfield Real Estate Services Inc. company, a TSX-listed corporation trading under the symbol TSX:BRE.
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