Canada housing market outlook predicts home prices to rise

Bad news, buyers: Home prices in Canada predicted to jump by $54K this winter

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Are you hoping to buy a home in Canada but waiting for prices to drop? A new report predicts that housing prices are set to rise again by the end of 2023, due in part to the Bank of Canada’s high interest rates and low market supply.

That’s according to Royal LePage’s national year-end price forecast, which predicts the increase to be softer than earlier suggested, but still out of reach for many Canadians.

The aggregate price of a home in Canada is currently $802,900, but it’s expected to jump 7% in the last quarter of the year. That increase was earlier expected to hit as high as 8.5% — but the softening still means about $54,000 for the average home in Canada.

Currently, a single-family detached home remains in high demand and sits above the average at $833,600 nationally, according to the reports’ third quarter figures.

Condo prices have remained relatively flat in recent months, but year over year they have risen by 3.8% to $587,000.

Royal LePage President and CEO Phil Soper says markets that saw activity slow last quarter include Vancouver and Toronto, but Calgary broke the trend.

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“Calgary is the only city whose year-end aggregate price forecast has been increased, due to sustained activity through the summer months and a strong start to the fall market. The region, which continues to attract buyers from across the country, saw more moderate yet steady appreciation through the pandemic-fueled boom,” Soper said.

Even with a slowdown, Metro Vancouver’s prices sit at an average of $2,626,100 for a detached home, and Royal LePage suggests costs will increase by 7% before 2024.

Toronto’s housing prices are at an average of $1,693,700 for a detached home and are predicted to jump by 9% due in part to the looming Graduated Municipal Land Transfer Tax coming in January.

Soper added that the current Bank of Canada rate of 5% has meant many buyers have steered clear of entering the market.

“Once interest rates begin to ease, even by only a small amount, we expect buyers will return to the market in large numbers and the relentless upward march of home prices will begin again,” he said, adding that it’s unclear if the Bank of Canada will hold the lending rates steady or not.

Additionally, while there may be more prospective buyers, the housing supply remains out of step with the need, Soper explained.

“The housing challenge is complex. A large number of young Canadians are looking to purchase or rent their first home, the number of people per new household is smaller than a generation ago, and baby boomers are living to a greater age and choosing to stay in their homes longer. Retirements are growing and there aren’t enough young people to take over, so we need to welcome immigrants at a record rate. New Canadians need housing too, of course,” he said.

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