Canadian homes will be nearly 10 per cent more expensive at the end of 2024 than they were the year before, according to a new report.
On Friday realty firm Royal LePage released an updated forecast predicting that aggregate Canadian home prices will rise nine per cent in the fourth quarter of this year compared with the end of 2023.
The report says two things are pushing prices up: the “severe shortage” of housing across the country and more demand from sidelined homebuyers who could enter the market if the Bank of Canada lowers its key interest rate, which currently sits at five per cent.
“A decrease in the bank rate, which will translate into cheaper mortgages, will increase the demand in the marketplace” and push up prices, Royal LePage CEO Philip Soper told Global News.
Pointing to previous Royal LePage reports, Soper said many Canadians who have been waiting to buy a home will take an even marginally lower interest rate as a sign that it’s time to buy.
“When we reach out to Canadians,” he said, speaking from Toronto, “they say, ‘I just want to see some indication that rates are beginning to drop (so) that I’ll feel comfortable getting into the market.’”
John Pasalis, president of Toronto brokerage Realosophy Realty, also cautioned that lower interest rates may not help homebuyers.
“If rates drop enough, it’s going to stimulate more demand, it’s going to push prices higher,” he said.
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“People expect that (lower rates) could potentially give them a bit more of an edge, but it gives every other buyer an edge as well.”
Soper said Royal LePage revised its price prediction upwards after a strong first quarter in 2024.
Nationwide, the report shows the median (the middle number between the lowest and highest prices) for a single-family detached home increased 4.5 per cent, from the first quarter of 2023 to the first quarter of 2024, to $845,300 and the median price of a condominium rose 3.5 per cent to $591,900.
It predicts Toronto and Montreal will see the largest annual home price jumps of 10 per cent and 8.5 per cent, respectively. Vancouver remains the most expensive market but Royal LePage predicts prices in the Greater Toronto Area will surpass those in the West Coast city in the second half of 2024.
Aggregate home prices in Quebec City and Calgary will rise by eight per cent, while Regina, Winnipeg and Halifax will see a five per cent increase, the report predicts.
Rising home prices have become a political flashpoint and the federal and many provincial governments have unveiled plans to lower prices, which includes quickly building homes to increase supply.
Soper called the policies to increase housing supply “strong” but said the execution was slow.
He referred to plans to give tax breaks and incentives to homebuyers “well-intentioned mistakes,” saying they will create more would-be buyers, which will increase demand and drive up prices further.
On Thursday, Deputy Prime Minister and Finance Minister Chrystia Freeland announced new measures aimed at making it easier for first-time buyers, including increasing the withdrawal limits under the Home Buyers’ Plan and extending mortgage amortizations for some.
Pasalis said potential homebuyers should not take their cues from recent announcements.
“It’s so impossible to time the market,” Pasalis said.
“When you’re buying a home, you just want to buy for the long term, and not try to focus on predicting where home prices will be over the next three to six months because it’s very hard to predict.”
—with files from Global News’ Uday Rana and Craig Lord
© 2024 Global News, a division of Corus Entertainment Inc.
