Canadian home prices are anticipated to record strong growth yet again next year according to new market insights by Royal LePage.
In a market forecast released today, the brokerage predicted that home values are expected to “rise strongly again in 2022, however at a slower pace compared to 2021.” The Royal LePage Market Survey Forecast predicts the aggregate price of a home in Canada will rise 10.5 per cent on an annual basis in 2022, up to $859,700.
By housing type, the median price of a single-family detached property would increase 11 per cent to $918,000, while the value of a condo would grow eight per cent to a median price of $594,000.
Royal LePage noted that pent-up demand from buyers who were unable to purchase in 2021, combined with the need for housing from newcomers to Canada and newly-formed households, would put upward pressure on prices in a market that is suffering from a “chronic supply shortage.” Meanwhile, heightened immigration targets from the federal government are likely to boost housing demand in large urban communities. Pent-up demand is expected to continue throughout winter, bleeding into the 2022 spring market.
“The lack of housing supply in Canada is a very real issue; one that cannot be solved overnight. While some believe that housing is now overvalued, signals point to a level of demand that will continue to outpace inventory, keeping prices rising on a steep upward trajectory,” said Phil Soper, president and CEO of Royal LePage, in a press release.
“That said, I do expect to see price appreciation ease from the unhealthy levels that we have been grappling with over the last 18 months.”
In the Greater Toronto Area, the aggregate price of a home in Q4-2022 is expected to increase 11 per cent annually to $1,256,500. In the same timeline, the median price of a single-family detached home will rise 10 per cent to $1,564,200, and up 12 per cent to $763,80 for condos. This is the only major region where the price appreciation of a condo is anticipated to exceed single-family homes, Royal LePage said.
Virus changes outlook
“For a short period of time, prices dipped and an onslaught of vacant units sent rental rates downward, but that trend was short-lived. Not only have condo prices rebounded, competition is heating up as entry-level buyers see them as an affordable way to get onto the real estate ladder,” said Cailey Heaps at Heaps Estrin Team, Royal LePage Real Estate Services Ltd.
In Greater Vancouver, aggregate prices in Q4-2022 are forecasted to jump 10.5 per cent year-over-year to $1,375,700. Single-family detached homes will see the median price rise 12 per cent to $1,892,800, and eight per cent to $766,800 for condos during the same period.
The Greater Montreal Area is expected to see aggregate prices in Q4-2022 increase eight per cent to $564,800. The median price of a single-family detached home will rise nine per cent next year to $648,600, and condos up 6.5 per cent to $447,300.
Soper pointed out that the arrival of the new Omicron variant, coupled with Canada’s strong economy and employment trends, would strengthen the housing market. Employers may opt to ease off on back-to-office plans, refocusing the importance of home as a place to both live and work. Meanwhile, as travel and entertainment options are disrupted, the household cash stockpiling trend will continue.
“All of these economic variables have been shown to stimulate housing activity,” said Soper. “Many of those looking to purchase a home, whether their first, an upgrade, or a recreational property, stand able to take advantage of increased savings and record-low interest rates.”
Lockdowns across the country have been known to stimulate buyer interest — particularly those who may have otherwise bought a condo — in larger homes that offer access to outdoor space. Royal LePage stated that this property segment has rebounded as affordability fades in the middle and upper ends of the market.
“Demand for condos has picked up significantly in recent months, especially in major cities like Toronto and Montreal,” said Karen Yolevski, chief operating officer of Royal LePage Real Estate Services Ltd.
“The price appreciation gap between condominiums and detached properties is narrowing. This trend will continue in 2022, as entry-level buyers are priced out of more expensive property segments, and the revival of the downtown core continues,” she added.