Study says positive outlook for real estate in 2020 based on "healthy buyer demand"
Canadian home prices are expected to see healthy appreciation by the end of 2020, driven by low single-digit appreciation in both the condominium and detached home segments.
According to the Royal LePage Market Survey Forecast, the aggregate price of a home in Canada is forecast to rise 3.2% year-over-year to $669,800 in 2020, with the median price of a condominium and two-storey detached house projected to increase 3.6% and 3.1% to $506,100 and $785,400, respectively
Read more: Canadian housing costs have more than tripled since the '80s
“The positive outlook for Canadian real estate in 2020 is based on healthy buyer demand,” said the study. “A segment of potential homeowners that once put home purchasing on hold beginning in January 2018, due to the introduction of the mortgage stress test, started returning to the market in the second half of 2019, driving competition and demand.”
The study also revealed Canada’s “healthy” immigration rate as another significant driver. According to the Royal LePage Newcomer Survey, newcomers to Canada are expected to purchase one in every five homes on the market over the next five years.
“Our 2020 national forecast is based on a continuation of healthy economic conditions,” said Phil Soper, president and chief executive officer of Royal LePage. “Paradoxically, a slowdown in economic growth could cause us to revise the outlook upward. While one month does not a trend make, November's surprisingly weak employment numbers may be the trigger that causes the Bank of Canada to join the US Federal Reserve in lowering interest rates. Falling rates normally encourage new housing demand. This would mean further upward price pressure in regions where employment remains healthy, which is most of the country. That window to lower or flat home prices is closing or has closed for most Canadians.”
