According to Royal LePage’s Market Survey Forecast, released to the public on December 12, the aggregate price of a home in Canada is expected to increase by a modest 3.2 percent over the course of 2020. The median price of condo properties is projected to rise by a modest 3.6% to $506,100, while detached properties are expected to gain 3.1% and end the year with a median value of $785,400.
The report sees two trends driving housing demand in 2020: a robust immigration rate – new arrivals are expected to purchase roughly 20 percent of the homes that hit the market this year – and a return to the market of buyers who slammed the brakes on their home buying journeys after the introduction of the mortgage stress test in January of 2018.
Those buyers came back in full force in the latter part of 2019. With no significant market disruptions or interest rate hikes on the horizon, they have no reason for another retreat.
“Paradoxically,” said Royal LePage CEO Phil Soper in a statement accompanying the report, “a slowdown in economic growth could cause us to revise the outlook upward. While one month does not a trend make, November’s surprisingly weak employment numbers may be the trigger that causes the Bank of Canada to join the U.S. Federal Reserve in lowering interest rates.
“Falling rates normally encourage new housing demand. This would mean further upward price pressure in regions where employment remains healthy, which is most of the country. That window to lower or flat home prices is closing or has closed for most Canadians.”
The survey examined conditions in nine metropolitan centres and took into consideration the prices of resale and new build properties. Here are a few of the highlights:
Low supply and a surging population will keep pressure on prices in the Greater Toronto Area. Royal LePage projects a six percent increase in the median condo price, pushing it to $600,000, and a 4.5 percent increase in the median price for a two-storey detached home, which would see a return to the $1 million-plus figure residents of Toronto have unfortunately grown accustomed to.
“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.
The Montreal area is expected to maintain its market momentum throughout 2020, with the median value of two-storey homes expected to rise by a healthy six percent to $581,300. The price of condo properties in the city is projected to jump five percent to a new high of $355,100.
Rounding out the survey’s top three appreciating markets is Ottawa, where a sizzling economy and relative affordability have combined to create one of the country’s most competitive environments for buyers.
Unfortunately, those buyers will continue to find themselves in fierce bidding wars for any property priced lower than $500,000. Such activity will help raise the median price for a two-storey detached home to $547,600, a year-over-year increase of five percent. Condominium prices are expected to rise only 3.5 percent, as the city is currently humming with new condo projects.
Of the remaining six communities, Halifax, Regina and Greater Vancouver are expected to see the biggest increases in condo values, with Halifax leading the way with a projected rise of 3.75 percent. Calgary, Vancouver and Halifax are the only cities in this group where detached prices are predicted to rise by more than one percent.
To read the full report, visit https://docs.rlpnetwork.com/rlp.ca/PressReleases/National_Royal_LePage_2020_Forecast.pdf
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