Royal LePage forecasts a 5.5% increase in aggregate home prices in 2024
According to the latest Royal LePage House Price Survey, the aggregate price of a home in Canada increased 1.6% year over year to $815,500 in the third quarter of 2024.
However, on a quarter-over-quarter basis, the national aggregate home price experienced a 1.1% decline, reflecting sluggish activity in most markets over the summer. In September, sales volumes rebounded, with over 38% of regional markets reporting positive aggregate price gains compared to the previous quarter.
“Despite three cuts to the Bank of Canada’s overnight lending rate, buyer demand nationally remains weak, particularly among two key groups: first-time homebuyers and small investors,” stated Phil Soper, president and CEO of Royal LePage. “First-time buyers, who are more sensitive to interest rates, are adopting a wait-and-see attitude. With home prices essentially flat and interest rates steadily declining, they perceive no penalty in postponing their purchase."
Soper also noted, “Similarly, small investors who typically buy condominiums to rent out and supply much of Canada’s rental housing are also hesitant. Elevated rates have made the financials unworkable, with carrying costs surpassing rental income. While historically some landlords accept negative cash flow temporarily when properties are appreciating in value, the current flat prices do not justify many investments. We believe that both groups will re-enter the market in significant numbers as property values begin to rise again."
Total listings on royallepage.ca, Soper added, “reached a historical high in September, up 19% year-over-year. “Clearly, existing homeowners are ready to move. And all buyers have more choice and less competition than is typical in our growing nation. The market recovery is underway and will continue to gain strength into 2025.”
The Royal LePage National House Price Composite includes proprietary property data from 64 of the nation's largest real estate markets. When categorized by housing type, the national median price for a single-family detached home increased 2% year-over-year to $850,400, while the median price of a condominium rose 0.5% to $590,200.
With further rate cuts expected from the Bank of Canada, Soper believes the upcoming change in mortgage regulations, effective December 15, 2024, will stimulate market activity. He emphasized the need for increased housing supply to address affordability challenges, as the next generation of homebuyers remains committed despite facing challenges.
Royal LePage forecasts a 5.5% increase in aggregate home prices in 2024's fourth quarter compared to last year, indicating that recovery is underway in many markets.
