Royal LePage CEO urges caution with election promises aimed at stimulating housing demand that lack concrete plans to address supply shortages
- Housing recovery gains strength with national aggregate price forecast to rise 1.5% during the fourth quarter of 2019 compared to same period in 2018
- Price gap between condominiums and houses shrinks as median condo price in the City of Toronto surpasses $600,000 mark
- Montreal East posts highest home price appreciation rate in Canada’s largest urban centres, rising 8.5%
- Lower prices in Greater Vancouver attract a new wave of home buyers, resulting in a spike in home sale volumes
TORONTO, October 10, 2019 – According to the Royal LePage House Price Survey released today, the aggregate price of a home in Canada has continued to post steady year-over-year gains during the third quarter of 2019 as the real estate market sustained its recovery from the significant downturn of 2018 and early 2019, following the introduction of the federal mortgage stress test.
“It is encouraging to see our political leaders devote thought and time to housing issues during the federal election,” said Phil Soper, president and CEO, Royal LePage. “With the fastest growing population among advanced economies worldwide, providing adequate shelter for Canada’s rapid pace of household formation presents an economic opportunity and a social challenge.
“Careful stewardship of the real estate industry and its related financial sector is critical for the health of the country’s economy and the personal wealth of Canadian families,” Soper continued. “Well-intentioned election promises aimed at making housing more accessible and affordable to first-time buyers will fall flat if they trigger a surge in demand without a corresponding increase in the supply of homes. For example, lowering monthly mortgage payments by stretching repayment over a longer time period looks great on the surface, yet a surge in new buyers could cause prices to escalate, erasing the enhanced purchasing power.”
The Royal LePage National House Price Composite, compiled from proprietary property data in 63 of the nation’s largest real estate markets, showed that the median price of a home in Canada increased 1.4 per cent year-over-year to $630,335 in the third quarter of 2019. When broken out by housing type, the median price of a two-storey home rose 1.3 per cent year-over-year to $738,346, while the median price of a bungalow remained flat at $521,250. Nationally, condominiums remained the fastest appreciating housing type, with the median price rising 3.4 per cent year-over-year to $457,911. Data analyzed contains both resale and new build transactions, provided by Royal LePage’s sister company, RPS Real Property Solutions.
“Low interest rates and an outstanding employment picture continue to buoy consumer confidence and support our recovering real estate market,” said Soper. “The collateral damage from the trade war between the U.S. and China has been manageable to date. Barring a full-blown American recession, our outlook for Canada’s housing sector is for continued market expansion.”
Looking to the fourth quarter of 2019, Royal LePage forecasts that the aggregate price of a home in Canada will rise 1.5 per cent year-over-year to $632,226, which is a 0.3 per cent increase compared to the third quarter of 2019. The 2019 fourth quarter forecast is dependent on consistent economic conditions and no new housing policy changes.
Looking to regional real estate trends during the third quarter, condominiums, once affordable to most families and single professionals in the City of Toronto, have surpassed the $600,000 mark, rising to $618,391. As the price gap between condominiums and houses shrinks in the region, demand for detached properties has grown. The median price of a two-storey home in the city centre rose 5.5 per cent, signaling that buyer demand has largely absorbed the mortgage stress test hurdle to homeownership. In the fourth quarter, Royal LePage forecasts the aggregate price of a home in the Greater Toronto Areato be relatively flat quarter-over-quarter at $859,301, which is a 3.1 per cent increase over the fourth quarter of 2018.
While we predicted that the pace of home price appreciation in the Greater Montreal Area would slow down in the second half of 2019, the aggregate home price in the region remained strong, increasing 5.9 per cent year-over-year, well above the national rate. Bungalows in Montreal West posted the highest price appreciation across all housing types surveyed in the country, rising 12.2 per cent year-over-year to $447,663 while the aggregate price of home in Montreal East rose 8.5 per cent to $439,499 – the highest aggregate price increase among the largest urban centres nationwide. Significant price growth in Montreal East began to surface since the fourth quarter of 2018 as demand in the city core and lack of supply pushed buyers into the ends of the city. Overall demand in the region stems from buyers watching prices escalate and are looking for affordable properties. Another factor is strong consumer confidence as employment remains healthy and economic fundamentals remain positive. In the fourth quarter, the aggregate price of a home in the Greater Montreal Area is forecast to increase 1.6 per cent quarter-over-quarter to $425,431, which is a 6.0 per cent increase over the fourth quarter of 2018, representing the highest price increase forecast in the country.
The Greater Vancouverreal estate market continues to see year-over-year price declines, which has attracted considerable interest from buyers and spurred sales. The aggregate price of home in the region decreased 5.2 per cent year-over-year to $1,194,900. However, the quarterly trend shows that the rate of price decline has slowed and is expected to slow further as buyers see current prices as an opportunity to own property in one of Canada’s most beautiful and prosperous cities. In the third quarter, the aggregate price of a home in Greater Vancouver decreased 0.8 per cent quarter-over-quarter, while the previous two quarters had quarterly decreases of 1.5 per cent (Q2 2019/Q1 2019) and 1.6 per cent (Q1 2019/Q4 2018). In the fourth quarter, the aggregate price of a home in Greater Vancouver is forecast to decrease 0.4 per cent quarter-over-quarter to $1,190,120, which is a 5.5 per cent decrease compared to the fourth quarter of 2018.
Home price appreciation in Ottawa remained at a healthy pace in the third quarter as the aggregate price of a home increased 3.7 per cent year-over-year to $481,948, a result of sustained demand from a growing technology sector. While the median price of a two-storey home and bungalow posted gains of 2.9 per cent and 8.7 per cent, respectively, the median price of a condominium dipped 0.9 per cent. The decline in the median price of a condominium reflects a lack of inventory in listings priced above entry-level. Both inventory and unit sales are expected to increase after the federal election. In the fourth quarter, the aggregate price of a home in Ottawa is forecast to increase 1.1 per cent quarter-over quarter to $487,249, which is a 3.7 per cent increase over the fourth quarter of 2018.
Commodity-driven real estate markets including Calgary, Edmonton, Regina, Saskatoon, and St. John’s posted year-over-year price declines. While the aggregate price of a home in Calgary decreased 4.3 per cent year-over-year to $464,542 in the third quarter, it rose 1.1 per cent over the previous quarter driven by appreciation in the two-storey detached house and bungalow segments. In the fourth quarter, the aggregate price of a home in Calgary is forecast to be flat at $465,007, which is a 2.4 per cent decrease over the fourth quarter of 2018.
In Atlantic Canada, Halifax’s low inventory and high demand have continued to put upward pressure on home prices. In the third quarter, the aggregate price of a home in the region rose 1.6 per cent year-over-year to $328,690. In the fourth quarter, the aggregate price of a home in Halifax is forecast to increase 3.7 per cent to $318,598 over the same period in 2018.
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 63 of the nation’s largest real estate markets. Housing values in the Royal LePage House Price Survey are based on the Royal LePage Canadian Real Estate Market Composite, produced quarterly through the use of company data in addition to data and analytics from its sister company, RPS Real Property Solutions, 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 18,000 real estate professionals in over 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 Bridgemarq Real Estate Services Inc. company, a TSX-listed corporation trading under the symbol TSX:BRE. For more information, please visit www.royallepage.ca.
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