[ad_1]
Breadcrumb Trail Links
Real Estate News
Average price expected to be $821,454 by end of 2023, up from $757,100 in fourth quarter of 2022
Article content
Real estate company Royal LePage has upgraded its forecast for national home prices despite signs sales and prices may be cooling in the wake of the latest Bank of Canada interest rate hikes.
Advertisement 2
Article content
The national aggregate home price — calculated from the median of all housing types — is projected to rise 8.5 per cent to $821,454 by the end of the year, up from $757,100 in the fourth quarter of 2022, the national brokerage said in its market survey forecast released July 13. That is up significantly from the 4.5 per cent increase Royal LePage predicted in its April survey, when it said prices would end the year at $791,170.
Article content
“The previous forecast has been revised upward to reflect strong activity and price appreciation in the first half of the year,” the company said in a press release. For the second half of 2023, Royal LePage expects price increases to slow or rise “marginally” quarter over quarter as the latest interest rate hike takes hold.
Article content
Advertisement 3
Article content
Still, the company said an ongoing shortage of listings and demand from immigration mean pressure on prices will continue to build.
Canadian housing markets went on a tear in early 2023. Actual national prices rose from $612,855 in January to $728,972 in May and national sales leapt, according to data from the Canadian Real Estate Association (CREA).
The renewed activity caught the Bank of Canada’s attention and contributed to its decision to hike rates again to a 22-year high of five per cent on July 12, following a surprise increase in June.
In its statement on the rate hike, the central bank noted the economy performed “stronger than expected, with more momentum in demand” including in the housing market, which “has seen some pickup.” It added that a drop in housing starts and an overall lack of supply are “adding pressure to prices.”
Advertisement 4
Article content
But signs of moderation in housing prices and sales have started to appear. June numbers for Toronto showed a 17 per cent decline in sales from a peak of 9,012 units in May, ending a four-month streak of gains which coincided with the resumption of interest rate hikes last month. June numbers from CREA released July 14 indicated a resumption in rate hikes could be pouring cold water on markets after a 2.7 per cent drop in prices in June from May.
However, prices and sales in Vancouver and Calgary continued to rise last month, their respective real estate groups said.
Royal LePage thinks markets will adapt to a more hawkish Bank of Canada.
“Despite the central bank’s decision to start raising interest rates again, many buyers are still in the game. Demand remains strong, particularly among those who have secured a rate hold,” said Phil Soper, chief executive of Royal LePage. “Buyers who are determined to make a purchase this year have accepted the reality of higher initial carrying costs, rationally surmising that rates are at or near peak and will become more affordable before long.”
Advertisement 5
Article content
The report also said the rebound in homes prices following a rate-hikes induced correction last year will be good news for Canadians who bought homes at the peak of the market frenzy.
At the beginning of last year, prices jumped as people raced to take advantage of ultra-low borrowing rates, causing the national average to rise to an all time high of $816,637 according to CREA. However, prices fell almost 30 per cent from February 2022 to the market bottom in January following a series of Bank of Canada rate hikes.
New homeowners, who watched property values drop below what they paid, are close to recouping those losses, the brokerage’s report said. The aggregate price of a home in the second quarter sits just 5.6 per cent below the peak reached in the first quarter of the year.
CREA slashes home sales forecast for this year
Housing affordability worse in cities rife with regulations: CMHC
Rate hike to squeeze homeowners, put pressure on prices
“We are close to that pivotal point where people who purchased at the peak would break even if they sold today,” Soper said.
• Email: gmvsuhanic@postmedia.com | Twitter: gsuhanic
Article content
Share this article in your social network
[ad_2]
Source link
Comments
Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.
Join the Conversation