The Royal LePage House Price Survey released yesterday revealed that the aggregate price of a home in Canada increased by 1.9% year-over-year to $824,300 in the second quarter of this year. Despite a slowdown in activity in Canada’s priciest markets, the national aggregate home price saw a 1.5% increase quarter-over-quarter.
“Canada’s housing market is experiencing some inconsistency, as demonstrated in the last three months,” said Phil Soper, president and CEO of Royal LePage. “Although home prices rose nationally, the number of properties bought and sold decreased, creating an unusual dynamic. However, the increase in inventory levels in many regions brings us closer to a balanced market than we have seen in several years.”
Soper pointed out that this trend is noticeable in the greater regions of Toronto and Vancouver, where sales have declined but prices remain stable. Conversely, the prairie provinces and Quebec continue to face low supply and strong competition.
A ‘tepid’ market response to June’s interest rate cut
Despite the Bank of Canada’s interest rate cut on June 5, buyers did not rush back to the market as anticipated. Soper noted, “The market response to the quarter-point rate cut was underwhelming as it did not significantly improve affordability. Our research earlier in the year indicated that only a small percentage of potential homebuyers would be motivated by a minor rate drop. The market may react differently to more substantial rate cuts in the future.”
A survey by Royal LePage found that while 51% of sidelined homebuyers would restart their search with reduced interest rates, only 10% believed a 25-basis-point drop would be enough to bring them back to the market. Many are waiting for larger rate cuts before considering resuming their search.
Prices
The Royal LePage National House Price Composite indicated a 2.2% year-over-year increase in the median price of a single-family detached home to $860,600. The median price of a condominium rose by 1.6% to $596,500. Quarter-over-quarter, the median prices continued to rise for both property types.
The national aggregate home price is significantly higher than pre-pandemic levels, showing a 30.8% increase compared to the same period in 2019.
Inflation and interest rates
Over the past two years, Canada’s housing market has experienced fluctuating prices due to higher interest rates. As the Bank of Canada navigates reducing the key lending rate while managing inflation, certain segments of the housing market have stalled.
Soper emphasized the need for a balanced approach to address pent-up demand in the market while controlling inflation. New household formation and immigration continue to drive the need for housing, and an abrupt surge in demand could lead to market instability.
Statistics Canada reported that the country’s inflation rate rose to 2.9% in May, highlighting the impact of shelter costs.
Q4 2024 forecast
Royal LePage predicts a 9% increase in the aggregate price of a home in Canada in the fourth quarter of this year compared to the same quarter last year. Home prices are expected to continue experiencing moderate appreciation in the second half of 2024.
Review the full report, including regional summaries, here.
Source link
This article was complied with AI assistance and reviewed by an editor. More information can be found in our T &C
