Prices in the prime property segment are expected to grow further next year as buyers compete for a limited supply of homes, according to the latest market forecast by Royal LePage.
Substantial gains are forecast for the Greater Toronto Area (GTA), the Greater Montreal Area (GMA), and the Greater Ottawa, with both homes and condo segments likely to post stable price increases next year.
The condo segment in GTA is expected to outpace the growth in the region’s detached segment. During the past 12 months to January this year, the median price of luxury homes in GTA rose by 1.2% to $3.63m while the value of condos increased by 7% to $2.4m.
Steven Green, a sales representative at Royal LePage Partners Realty, said condos in the region receive massive interest from a range of buyers, including downsizers, young executives, property investors, and foreign buyers.
"Luxury buyers face the same low-inventory scenario that challenges the overall residential market. Some of the city's most desirable pockets have a very low inventory of listings, which is unfortunate for sellers who want to move up in the same neighbourhood," Green said.
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Condos are expected to realise a 6% gain in prices to $2.55m next year, while detached homes are projected to do the same at 2.5% to $3.72m.
Supply issues were also one of the main drivers of price gains in the GMA. Over the year to January, the market registered increases of 8.5% to $1.85m for houses and 8.3% to $1.41m for condos.
Marie-Yvonne Paint, a real estate broker at Royal LePage Heritage, said sales for luxury houses happen quickly because of the intense competition amongst buyers for a limited supply of listings.
"While demand continues to grow for luxury condominiums, buyers still have an excellent selection, and there is less pressure to move quickly when a listing becomes available," she said.
Over the next 12 months, the median prices of houses and condos in the region are poised to grow by 5.5% to $1.96m and 5% to $1.48m, respectively.
In the Greater Ottawa, newly-built condo projects are selling for more than what is being asked in the resale market.
"The price gap is putting upward pressure on resale luxury condo prices. Rising land acquisition and construction costs are significant contributors to increasing prices in the luxury home market," said Charles Sezlik, sales representative, Royal LePage Team Realty.
The median price of luxury houses in the Ottawa region rose by 2.7% to $1.84m while that of condos increased by 2.2% to $1.01m.
Based on forecasts, the Greater Ottawa is likely to report gains of 2.5% to $1.9m for houses and 1.5% to $1.03m for condos.
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