High demand is expected to push prices up by 5% in Vancouver in 2016 and 5% in the Greater Toronto area. Canada as a whole will also see further price gains, RE/MAX predicted.
“Based on projections for Canada’s key housing markets, RE/MAX expects the average home price in Canada to increase 2.5% in 2016,” said Gurinder Sandhu, executive vice president, RE/MAX INTEGRA Ontario-Atlantic Canada Region. “While we expect to see some price decreases, particularly in regions that rely on oil and natural resource sectors, strong demand in Canada’s urban centres is expected to continue throughout next year.”
RE/MAX also found that regions outside the nation’s highest-priced cities reported a “spillover effect” from price increases in the cities themselves. “There were significant year-over-year price increases in Victoria (13%), Fraser Valley (10%), Hamilton-Burlington(12%) and Barrie (8%),” RE/MAX reported.
The company also studied the possible effect of an increased minimum down payment on homes above $500,000 – a scheme the Department of Finance is reportedly considering. If it is implemented, RE/MAX predicted that the effect on first-time buyers in most Canadian markets would be minimal. In expensive markets like Toronto and Vancouver, however, a higher minimum down payment could discourage some buyers. According to a RE/MAX survey, more than two thirds of Canadians agree that 10% or more is a sufficient down payment for a home.
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Throughout 2015, high demand and low supply pushed prices higher and higher in Canada’s hottest market. That’s a trend that will continue in 2016, according to projections by RE/MAX.