Royal LePage is forecasting that the average price of a home in Canada will increase 4.5 per cent in the fourth quarter of 2023, compared to the same quarter in 2022. This revised forecast anticipates an earlier-than-expected boost in activity in major housing markets across Canada.
The projection is included in the real estate company’s house price survey released Thursday, which drew from national property data as well as statistics collected from 62 of Canada’s largest real estate markets.
“Coming out of a correction, it is common to underestimate the speed at which the market will turn itself around,” Phil Soper, president and CEO of Royal LePage, said in a press release. “As market activity is rebounding faster than anticipated, we are looking ahead with a sense of cautious optimism. While we do not expect huge price gains this year, some sense of normalcy is returning to the market.”
The average price of a home in Canada reached its peak in February 2022. Over the course of a year, the national average fell 18.9 per cent, according to the Canadian Real Estate Association. According to Soper, the housing market’s “inevitable correction” was triggered by the Bank of Canada’s aggressive interest rate hikes, which were aimed at combating worsening inflation. After a series of increases throughout 2022, the Bank of Canada recently decided to hold its policy rate steady at 4.5 per cent. Royal LePage cited an early return of buyer demand that might be a result of stabilizing interest rates.
“We have turned the corner and the housing economy is growing again; none too soon for many buyers, who have been patiently waiting for prices to bottom out,” Soper said in the release.
The survey also shows that the aggregate price of a home in Canada has decreased 9.2 per cent year-over-year in the first fiscal quarter of 2023, while the aggregate price of a home on a quarter-over-quarter basis has increased 2.8 per cent.
According to the data, three of Canada’s biggest cities saw aggregate price gains between the fourth quarter of 2022 and the first quarter of 2023. Toronto showed an increase of 4.8 per cent, while Montreal and Vancouver both showed a rise of 1.3 per quarter-cent over-quarter.
When categorized by housing type, Royal LePage’s report indicates that the median price of single-family detached homes fell 10.7 per cent year-over-year, now standing at $808,700. A smaller decline was reported in the median price of a condominium in Canada, which fell 6.7 per cent year-over-year and now stands at $571,700.
“Sanity is slowly returning to the housing market,” Soper said in the release. “While some hopeful buyers will remain sidelined by a reduced capacity to borrow in this higher rate environment, our market data shows that many of those who choose to pause their search to see where prices and interest rates would land have resumed their home buying plans.Unfortunately, the challenge they must now deal with is a severe shortage of homes for sale.”
A survey published by Re/Max in February shows 59 per cent of Canadians are concerned about housing affordability.
Royal LePage attributes dramatic market changes to the enduring ripple effects of COVID-19.
“There has been nothing ‘typical’ about Canada’s housing market since the start of the COVID-19 pandemic,” Soper said in a press release. “Lockdowns brought the housing market to a grinding halt in early 2020 before the work-from-home revolution catapulted it into a two-year, all-season frenzy of record sales volumes and aggressive price growth.”