TORONTO, July 10, 2019 – According to the Royal LePage House Price Survey released today, low interest rates and healthy employment have offset the market drag caused by widespread economic uncertainty that has kept monthly unit sales volumes below the ten-year average leading to very modest home price appreciation at the national level.
The Royal LePage National House Price Composite, compiled from proprietary property data in 63 of the nation’s largest real estate markets, showed that the price of a home in Canada increased 1.1 per cent year-over-year to $621,696 in the second quarter of 2019. When broken out by housing type, the median price of a two-storey home rose 1.0 per cent year-over-year to $727,165, while the median price of a bungalow dipped 0.4 per cent year-over-year to $516,048. Condominiums remained the fastest growing housing type on a national basis, with its median price rising 3.8 per cent year-over-year to $452,451.
“We now have evidence of a sustained market recovery in some of the nation’s largest markets, and signs of a price floor in other regions hit hard by the eighteen month-old housing correction,” said Phil Soper, president and CEO, Royal LePage. “Only in the West do we see a significant number of home buyers remaining on the sidelines, depressing sales volumes and causing prices to sag. Buoyed by supportive economic conditions, many stubborn homeowners in B.C. and Alberta remain unwilling to let their precious real estate go for less than what they perceive as fair value, which has gone a long way to protecting existing home values.”
Canada’s economy continues to grow, albeit at an unexceptional pace, with a slumping housing market being a major contributor to the slowdown. Offsetting this, business investment has picked up considerably, helping to sustain a period of exceptional employment growth, particularly in British Columbia, Ontario, and Quebec.
Trade tension continues to weigh on consumer confidence and housing market health. A recent detente in Chinese-American relations, and a stronger than expected mid-year employment picture has muted some of the U.S. recession talk. While a rate cut by the Federal Reserve is still a possibility, a similar move by the Bank of Canada is less likely. Lower rates south of the border and a stronger American economy would have positive implications for exports and Canadian consumer and business confidence.
Said Soper, “Don’t misinterpret rate cut expectations south of the border as rate cut likelihood in Canada. We have related but independent economies and monetary policy.”
Looking ahead to the end of the year, Royal LePage expects national home prices to see a modest uptick, rising 0.4 per cent compared to the end of 2018. The Greater Toronto Area and Greater Montreal Area are expected to continue to drive national home price gains with forecast increases of 1.4 per cent and 4.5 per cent respectively, while Ottawa is expected to outpace the GTA with a projected price increase of 1.6 per cent by year-end. Weakness in the Greater Vancouver market is expected to continue, with the aggregate home price forecast to decrease by 5.5 per cent compared to end of year 2018. Other Western cities are also expected to decline, with home prices in Calgary, Edmonton, and Regina expected to decrease 3.6 per cent, 3.0 per cent, and 4.9 per cent respectively.
The enhanced housing affordability measures introduced in the federal budget in March are not expected to have a significant effect on home prices. The increase in the registered retirement savings plan withdrawal limit to $35,000 from $25,000 has been in effect since it was announced. The First-Time Home Buyer Incentive – a three-year, $1.25 billion shared equity mortgage program whereby the Canadian Housing and Mortgage Corporation (CMHC) will co-invest up to five per cent of the purchase price of an existing home – is expected to begin in September. The program is expected to help young Canadians afford a first home closer to urban centres.
“Overall, the new government programs should be supportive of the housing market, but their impact on home price appreciation will likely be minor – and that’s a good thing,” said Soper. “Heavy-handed policy intervention can cause artificial spikes or drops in home prices. What it doesn’t do is change the need for shelter; it just stokes price inflation and housing shortages, or market slumps and dangerous pent-up demand.”
Once again, home price appreciation in Ontario cities heavily influenced the national results in the second quarter of 2019, driven by pent-up demand from a sluggish first quarter, a strong job market, and an influx of new residents into the GTA.
“The market in the GTA began to tighten this spring, as sales outstripped new listings,” said Soper. “In the City of Toronto, prices rose above inflation across all housing types, led once again by strength in the condo market. But the most encouraging signs came from the suburbs, where areas that saw the most significant price corrections such as Oshawa and Richmond Hill started to rebound.”
The aggregate home price in the City of Toronto rose 4.3 per cent year-over-year in the second quarter of 2019. Two-storey home prices and bungalow home prices rose 2.8 per cent and 2.4 per cent year-over-year, respectively, while condo prices rose a significant 7.9 per cent year-over-year. Overall, the GTA’s aggregate home price rose 2.6 per cent over the same period.
Ottawa saw home prices rise by 6.2 per cent year-over-year although the region is expected to see a more modest but healthy gain of 1.6 per cent for the full year of 2019 compared to the end of 2018. Residential price appreciation in Ontario’s Golden Horseshoe region slowed from recent rapid price gains. Aggregate prices in Niagara/St. Catharine and Kitchener/Waterloo/Cambridge were up by 3.2 per cent and 2.5 per cent, respectively, while prices in Hamilton decreased 0.9 per cent year-over-year. Other notable median price increases for Ontario cities include Kingston at 6.9 per cent year-over-year. In western Ontario, London and Windsor both experienced some of the strongest home price appreciation in the country, with median prices rising 9.5 per cent and 8.8 per cent year-over-year, respectively.
In Quebec, the Greater Montreal Area remained one of the strongest markets in the country in the second quarter of 2019, with the aggregate price of a home increasing 5.8 per cent year-over-year to $410,828. The rate of home price appreciation in the Greater Montreal Area once again surpassed rates seen in the GTA (2.6%), Greater Vancouver (-4.1%) and the national average (1.1%).
“We forecast that the Montreal real estate market would begin to see more modest home price appreciation after robust growth last year, but the quarter-over-quarter increases are showing that the pace of growth in the area is not slowing,” said Soper. “Despite the strength of the Greater Montreal Area for the past three years, the city’s prices remain one third of Greater Vancouver and half of those in the Greater Toronto Area. At Montreal’s current home price growth rate, it would take 13 and 19 years respectively for Montreal home prices to catch up to Toronto and Vancouver.”
In British Columbia, government intervention continues to weigh on the housing market despite strong economic fundamentals. Home prices in Greater Vancouver declined for the second straight quarter on year-over-year basis, with the aggregate price falling 4.1 per cent in the second quarter to $1,208,674. The correction that started in the City of Vancouver has spread across the region with prices in Burnaby, Langley, and Richmond falling 7.3 per cent, 4.4 per cent, and 4.1 per cent, respectively.
“The slowdown that initially began in the British Columbia lower mainland’s most expensive trading areas, Vancouver and the region’s North Shore, has moved to the relatively affordable suburbs, as the policy-driven housing downturn nears the three-year mark,” said Soper. “Home price trends lag behind changes in home sales activity. With one of the strongest economies in the country, I would expect the recovery in sales volumes to begin this fall, with a slow recovery in home prices to follow. Other regions in the province such as Kelowna and Victoria have held up reasonably well so far.”
With sales still well below the ten-year average and new listings increasing, properties in the region’s most expensive markets like West Vancouver, North Vancouver, and the City of Vancouver were also hard hit, decreasing 7.6 per cent, 4.2 per cent, and 4.7 per cent year-over-year, respectively.
With an unemployment rate of 6.6 per cent as of June and personal insolvencies rising, the Alberta economy continues to lag, though a slight bump in employment is predicted in 2020. The aggregate price of a home in Calgary, Edmonton, and Fort McMurray fell 5.0 per cent, 0.9 per cent, and 0.1 per cent year-over-year to $460,089, $371,106 and $567,312, respectively. Prices were relatively stable on a quarter-over-quarter basis, and there is a possibility that the approval of the Trans Mountain Pipeline extension will spur an increase in consumer confidence.
Outside of Newfoundland, Atlantic Canada is benefitting from increased immigration and the relative economic weakness in Alberta. The aggregate price of a home in Charlottetown rose 3.0 per cent to $295,699. Halifax continued to see strong demand with prices rising across all housing types. The aggregate price of a home in the city rose 3.4 per cent to $328,023. The picture was mixed in New Brunswick, where aggregate prices in Fredericton and Saint John rose 2.5 per cent and 2.3 per cent respectively, while Moncton lagged behind with the aggregate price of a home decreasing 0.7 per cent.
TORONTO, June 6, 2019 – Recreational property in Canada saw healthy price gains leading up to the 2019 spring market, rising 5.0 per cent to $411,471 compared to the previous year. Royal LePage is forecasting another year of solid gains (4.7%) as high demand in Ontario and Quebec continue to put upward pressure on prices, offsetting softer market conditions in British Columbia. Low inventory in Ontario and weak demand in British Columbia were the primary drivers of a decline in Canadian recreational property sales (-8.3%).
In most of the country, young families are competing with baby boomers for homes in popular recreational property regions.
“With the youngest baby boomers a decade away from retirement, and their older peers well on their way, we are seeing robust demand for cottage, cabin and chalet-style retirement properties,” said Phil Soper, president and CEO, Royal LePage.
“Young families have traditionally made up a significant portion of the demand for recreational property, as they look to create a special place for children to grow up,” Soper continued. “Today they find themselves having to compete with their parents for that spot on the water, with boomers leveraging the significant equity from their existing urban homes. In Ontario and Quebec, this has resulted in exceptional demand and upward pressure on prices. In Western Canada, it has supported demand and stabilized prices.”
Both Ontario and Alberta saw greater aggregate price increases than other provinces, rising 7.2 and 10.2 per cent, respectively. Alberta’s increase was largely due to an 11.4 per cent pickup in the larger market of Canmore, with mostly healthy single digit gains elsewhere in the province.
Royal LePage forecasts the aggregate price of a single-family home in recreational regions in Canada to increase by 4.7 per cent by spring 2020, rising from $411,471 to $429,714.
Most provinces witnessed a year-over-year decline in recreational property sales. While a lack of inventory to meet demand resulted in a sales decline in Ontario, British Columbia’s sluggish sales mirrored trends in the province’s residential real estate market. The exception was Quebec, which experienced a 6.3 per cent year-over-year sales increase in single-family properties in reporting recreational communities as supply met demand.
Buyers looking to Atlantic Canada to purchase a recreational property can expect to find good selection this spring at affordable price points. Over the past year, the aggregate price of a single-family home in reporting recreational regions rose 5.9 per cent to $257,965 compared to the year prior. Waterfront recreational properties in the region are among the most affordable in Canada, with the median price for a waterfront single-family home sitting at $363,335.
“The affordability in the Atlantic region, particularly Halifax, continues to draw Canadians to the area for both recreation and retirement,” stated Marc Doucet, broker of record, Royal LePage Atlantic. “You’d be hard-pressed to find as much variety of recreational homes and unique landscapes.”
Royal LePage is expecting home prices in recreational regions to be stable over the next twelve months. The aggregate price of a single-family home is forecast to rise 0.7 per cent over the next year to $259,671.
Both sales and prices were up in the province’s recreational regions, reflecting the overall health of the economy. The aggregate price for a single-family home in the province’s reporting recreational regions rose 4.5 per cent to $194,315. With a good supply of inventory to meet demand, sales increased 6.3 per cent, well above the national average, which decreased 8.3 per cent.
“Quebecers are benefitting from one of the healthiest economies in the country right now and are confident investing in real estate and long term projects, including recreational property,” explained Dominic St-Pierre, vice president and general manager, Royal LePage, for the Quebec region.
Despite the floods that affected several regions in the province this spring, demand for recreational properties is expected to remain strong, with experts forecasting a 4.4 per cent increase in sales activity over the next twelve months. Over the same period, Royal LePage is forecasting the aggregate price of a single-family home in the province’s recreational region to rise 5.6 per cent to $205,148.
“The increase in sales activity is driven by Quebec’s job market strength, where the unemployment rate in April sat below 5 per cent for the first time since 1976. Salaries continue to rise in the province due to full employment, providing further consumer confidence,” said St-Pierre. “We are also noticing a surge of buyers between the ages of 40 and 60 looking to enjoy the cottage lifestyle and spend more time with the family.”
Although sales are down 7.9 per cent among reporting recreational regions across the province, the aggregate price for a single-family home rose 7.2 per cent to $393,253. The reason most often cited by Royal LePage recreational property experts for the price increase is low inventory, as retirees compete with young families looking to get away from the city.
“In Muskoka, we are seeing people in their 50s and 60s cashing out with significant amounts of money, as well as those who are coming into money and want to get out of the rat race,” said Bob Clarke, sales representative, Royal LePage Lakes of Muskoka. “A 300-foot lot on southern Lake Joe once would be about $1.6 million. Now, if I found one west-facing it would likely be $3.0 million. That puts pressure on 100- and 200-foot lots.”
Demand is high in the province and buyers have not been put off by late spring weather, rain or even flooding. Royal LePage is expecting the aggregate price of a single-family home in the province’s recreational regions to rise a further 8.0 per cent over the next twelve months, rising to $424,905.
Reporting recreational property regions in the Prairies saw softening in both prices and sales over the past year as the aggregate price for a single-family home decreased 6.3 per cent year-over-year to $194,147 and sales dipped 3.4 per cent during the same period. Royal LePage recreational property experts cited the region’s soft economy, which has limited families’ ability to purchase secondary properties, as the primary driver for the decline in both sales and prices.
In Saskatchewan’s popular Christopher Lake, Emma Lake and Candle Lake, the median price of a single-family home decreased 11.7 per cent compared to last year.
“We’ve had an economic downturn in our region, and this has affected lake properties. We are seeing fewer listings, which is creating some balance despite the slowdown in sales,” said Lou Doderai, owner and broker, Royal LePage Icon Realty. “Properties are selling but sellers are waiting a little longer.”
In Manitoba’s Interlake Area, both single-family home prices and sales have remained stable compared to last year as prices remained flat while sales dipped 1.8 per cent.
“Good affordability and proximity to Winnipeg has sustained demand and supported home prices in the region,” said Tyler Bucklaschuk, sales representative and broker, Royal LePage JMB & Associates. “Buyers are seeking access to beautiful lakes while still getting good internet reception and other conveniences. It’s the best of both worlds.”
Royal LePage forecasts single-family home prices in the Prairies’ recreational regions to decrease a further 3.1 per cent to $188,101 over the next year. However, softening prices are expected to spur some activity, and sales may increase over 2.0 per cent for the same period.
Driven by price gains in Canmore, the largest reporting region in Alberta, the aggregate price of a single-family home in recreational regions rose 10.2 per cent to $819,583. The aggregate price in the province is expected to increase 2.4 per cent in 2020.
Although sales in Canmore were flat compared to the same period last year, the median price of a single-family home in the region increased 11.4 per cent year-over-year to $930,000.
“We are seeing good demand in most segments of the market, including retirement, local, and recreational,” said Brad Hawker, broker and owner, Royal LePage Rocky Mountain Realty. “While most buyers already know about the year-round recreational activities and lifestyle, many are surprised to find the area with so many cultural opportunities and how incredibly welcoming Canmore is for new residents of all ages.”
While Canmore saw the largest year-over-year price gains, single-family homes in other reporting regions saw healthy single-digit gains.
Recreational property in British Columbia is showing significant softening compared to last year as sales decreased 22.5 per cent in reporting recreational regions and all regions posting a decrease. While the aggregate price of a single-family home is relatively flat (0.4%) compared to last year, Royal LePage recreational property experts in the region are citing reduced sales volumes in the lower end of the market skewing the median price upwards. Over the next year, the aggregate price is forecast to increase an additional 1.7 per cent in 2020.
“While demand has softened across the recreational property market, low inventory has kept prices stable,” said Gregg Hart, broker and owner of Royal LePage In The Comox Valley. “Mt. Washington had a good snow year and sales on the mountain were well ahead of last year. The inventory on both Denman and Hornby Island is very low, which is pushing prices higher just as the selling season gets going.”
Hart added that there is a good selection of waterfront properties currently on the market in the Valley and most of the buyers have been from the Lower Mainland.
The most popular region for buyers in British Columbia is the central Okanagan region where the median price for a single-family home decreased 3.0 per cent to $640,000 compared to last year.
“While sales are down, buyers from Alberta, Saskatchewan, and Vancouver are still active in the Okanagan region,” stated Mark Walker, sales representative, Royal LePage Kelowna. “Despite a slowdown in the Alberta economy, there are some positives that help offset the challenges we see. Our population is growing, as is the tech sector. And it’s beautiful here.”