Toronto and Montreal to come out on top in the coming year based on price growth in the condominium and two-storey segments, respectively
Canadian home prices are expected to appreciate a “healthy” 3.2% in 2020, according to the latest Royal LePage Market Survey Forecast. This is likely to be driven by small appreciation in both the condominium and detached home segments.
The aggregate price of a home in Canada is forecast to rise 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.
Healthy buyer demand is the reason behind the positive outlook for Canadian real estate. While the stress test caused some homeowners to be unable to qualify for a mortgage and others to sit on the sidelines in the early part of 2018, by the end of 2019, that seems to no longer be a factor for homebuyers. They are back and ready to engage in competition for home purchases.
Immigration is another significant factor in the demand for real estate. Newcomers to Canada are expected to purchase one in every five homes on the market over the next five years and arrive with both confidence in Canadian real estate and the savings to use toward a down payment, according to a Royal LePage Newcomer Survey released this October.
Detached housing is back in vogue, as “peak millennials” (those between the ages of 26 and 32) look for housing to suit their growing families. The national median price of a condominium has increased 48% since 2014 so in addition to not wanting to pay higher prices for a condo, this demographic wants the space that a detached home affords.
“The oldest peak millennials are now in their thirties,” said Soper. “This huge wave of Canadian consumers has been transforming Canadian real estate for a decade, putting more focus and upward price pressure on our condominium housing stock. With kids in hand and dog on leash, these parents are now eyeing the suburbs that their baby boomer parents so coveted. We predict that the period of disproportionately higher price appreciation in the condo segment is drawing to a close as interest in detached homes is reborn.”
In the Greater Toronto Area, the aggregate price of a home is forecast to increase 4.75% year-over-year in 2020, rising to $883,700. The median price of a condominium is expected to increase 6% year-over-year to $600,000, and the median price for a two-storey detached home is forecast to rise 4.5% year-over-year to $1,027,000 by the end of 2020.
“Inventory is critically low and it is possible that we could see a return to accelerating high price appreciation in the near term without new supply becoming available,” said Kevin Somers, Chief Operating Officer, Royal LePage Real Estate Services Limited. “Areas such as Richmond Hill and Markham, which were among the hardest hit by the recent market correction, have already shown signs of a recovery while areas closer to the city centre are showing significant momentum heading into 2020.”
Unlike the detached housing demand in much of the country, however, young families in the GTA can’t afford to move to a larger property. The First-Time Home Buyer Incentive may benefit single first-time condo buyers, especially in the greater region, but it is unlikely to benefit buyers looking for a larger property without the proposed modifications to increase the qualifying purchase threshold as was part of the Liberal election platform.
It’s blue skies ahead for the Greater Montreal Area, whose positive economic indicators will have a positive impact on price growth as well. The aggregate price of a home in the Greater Montreal Area is expected to increase 5.5% year-over-year by the end of 2020 to $457,900, which is similar to the rate of appreciation in 2019. The median price of a two-story detached home is expected to rise by 6% year-over-year to $581,300, and the median price of a condo is expected to increase 5% to $355,100. If the forecast holds true, 2020 will be the fourth consecutive year of price appreciation above 4% for the Greater Montreal Area.
“Strong demand continues to favour sellers, reducing inventory and pushing prices upward across the region,” said Dominic St-Pierre, vice president and general manager, Royal LePage, Quebec region, adding that incentives to increase access to property are helpful for first-time home buyers but they also create more demand. “It is important that government policy take into account measures that will offset imbalance between demand and supply to provide current and future generations with a better chance to own a home.”
Sales have picked up in the Greater Vancouver market, and Randy Ryalls, managing broker, Royal LePage Sterling Realty said that they’re starting to see the return if multiple offers for “quality listings”. In Greater Vancouver, the aggregate price of a home is forecast to increase 1.5% in 2020, rising to $1,125,200. The median price of a standard two-storey home is expected to rise 1.25% year-over-year to $1,460,700, while the median price of a condominium is forecast to increase 3% per cent to $666,900.
The aggregate price of a home in Ottawa is forecast to cross the half million dollar mark in 2020, increasing 4.5% year over year to $516,200. The median price of a condo is expected to increase 3.5% year-over-year to $341,300, while the median price for a two-storey detached home is forecast to rise 5% cent year-over-year to $547,600. Here too, detached homes are growing out of reach of the First-Time Buyer Incentive, although Kent Browne, broker and owner, Royal LePage TEAM Realty, says that there is a lot of condo construction in the city.
Even Calgary and Edmonton are expected to see aggregate home prices rise by 1.5% and 1% to $477,000 and $383,200, respectively. Local agents think that these markets may be returning to balance, and that prices won’t go any lower. Home prices in Winnipeg and Regina, however, are expected to remain flat—good news for buyers looking for real estate that is out of reach in most other areas of the country.
Price data, which includes both resale and new build, is provided by Royal LePage’s sister company RPS Real Property Solutions, a leading Canadian valuation company.
