Royal LePage has adjusted its 2022 national home price forecast, dropping the figure to reflect “softening markets” in Ontario and BC.
Previously, the real estate company predicted that home prices across Canada would rise 15% in 2022. Now, though, the forecast is calling for prices to be up just 5% at year-end.
The revised forecast, released today in Royal LePage’s Q2 2022 House Price Survey, follows “more aggressive than expected” interest rate hikes, which have resulted in a temporary drop in demand in parts of southern Ontario and BC.
“We have significantly reduced our outlook for 2022, however home prices are still forecast to end the year higher than 2021 and well above pre-pandemic norms,” said Phil Soper, president and CEO of Royal LePage.
“Following record price gains across the country, numerous markets in southern Ontario and parts of Greater Vancouver – specifically those that saw some of the highest price appreciation over the last two years – experienced a second quarter decline.”
Royal LePage predicts the average price of a home in Canada will be $817,950 by Q4 2022.
In the Greater Toronto Area, the company expects an average home price of $1,153,394 at year-end, a 3.0% increase from Q4 2021. In Greater Vancouver, Royal LePage forecasts an average home price of $1,315,965 in Q4 2022, up 5.0% from a year earlier.
- You might also like:
- Bank of Canada interest rate up by 1% in biggest spike since 1998
- Canadian homebuyers face the least affordable market in a generation: RBC
- Canadian home sales could decline 23% in 2022: TD
According to the survey, the aggregate price of a home in Canada reached $815,000 in Q2 2022, a year-over-year increase of 12.1%, but a quarterly drop of 4.9%. It marks the first quarter-over-quarter decline in home prices since Q1 2019, Royal LePage noted.
In the GTA, the aggregate price of a home hit $1,167,000 in Q2 2022. The figure is a yearly increase of 12.8%, but a quarterly decline of 8.1% – the region’s first since early 2018.
“The city of Toronto and the greater region… have seen housing demand slow in recent months as many buyers take a step back in an attempt to time the market,” said Karen Yolevski, chief operating officer, Royal LePage Real Estate Services Ltd.
In Greater Vancouver, the aggregate price of a home jumped to $1,311,900 in Q2 2022, an annual increase of 9.1%, but a quarterly drop of 4.1%. It was the region’s first quarterly price decline since Q3 2019.
“Real estate activity in Greater Vancouver has slowed over the last few months,” said Randy Ryalls, general manager, Royal LePage Sterling Realty.
“While prices continue to rise year-over-year, the rate of appreciation is slowing, and month-to-month we are seeing signs that balance is returning to the market.”
Barring a significant increase in inventory, Soper said Royal LePage expects that Q2 2022 “produced most of the price declines we will see this cycle.”
Soper believes the “highly unusual” decline will be short-lived, and that home prices will hold their value for the rest of the year as Canada’s “chronic housing shortage” has not been resolved.
“Although demand has temporarily weakened, Royal LePage is concerned that this short term reprise from rapidly rising home prices may cause decision makers to shift their attention to other issues, thinking Canada’s housing supply crisis can wait — it cannot,” Soper said.
“The current market correction will create pent-up demand. A growing domestic buyer pipeline coupled with the need to house hundreds of thousands of new Canadians threatens to far outstrip the tepid pace of new home construction.”