Omicron variant emergence may extend period
of unusually strong real estate markets
- The GTA is the only region where condominium price appreciation
is forecast to outpace that of detached homes; prices expected to
rise 12.0% year-over-year in 2022
- Greater regions of Toronto and
Vancouver forecast to see highest
aggregate price appreciation at 11.0% and 10.5%, respectively
- Detached home prices in Halifax expected to rise 10.5%, followed by
the Greater Montreal Area and
Ottawa (9.0%)
- Housing markets are expected to be unusually active through the
winter season
TORONTO, Dec. 15, 2021 /CNW/ - Following more than a year
of record price appreciation across the country, Canadian home
values are expected to rise strongly again in 2022, however at a
slower pace compared to 2021. Pent-up demand from buyers who were
unable to transact in 2021, coupled with the growing need for
shelter from new household formation and newcomers to Canada, will continue to put upward price
pressure on a market suffering from a chronic supply shortage.
According to the Royal LePage Market Survey Forecast, the
aggregate1 price of a home in Canada is set to rise 10.5 per cent
year-over-year to $859,700 in 2022,
with the median price of a single-family detached property and
condominium projected to increase 11.0 per cent and 8.0 per cent to
$918,000 and $594,000,
respectively.2
"The lack of housing supply in Canada is a very real issue; one that cannot
be solved overnight. While some believe that housing is now
overvalued, signals point to a level of demand that will continue
to outpace inventory, keeping prices rising on a steep upward
trajectory," said Phil Soper,
president, and CEO, Royal LePage.
"That said, I do expect to see price appreciation ease from the
unhealthy levels that we have been grappling with over the last 18
months."
Pent-up demand not addressed in 2021 is expected to continue
through the normally quiet winter season and spill over into the
spring market of 2022. In addition, the federal government's plan
to increase immigration levels will bring a surge of new demand,
particularly in large urban centres.
Soper noted that Canada's
strong economy, healthy full-time employment trends, and
paradoxically, the emergence of a new coronavirus variant, should
all contribute to the strength of the country's real estate
market.
"While the emergence of another COVID-19 variant is
disheartening, we can't ignore its probable impact on our nation's
real estate market," said Soper. "It is hard to imagine that the
Bank of Canada will begin the
inevitable campaign to dampen inflation through higher rates with
much still to be learned about Omicron and cases on the rise again.
Employers may back-off plans to mandate a return to the office,
sustaining the hyper-focus on the importance of the home as a place
to both live and work. And, normal travel and entertainment will
again be curtailed, continuing the household cash stockpiling trend
that has defined the pandemic era.
"All of these economic variables have been shown to stimulate
housing activity," Soper continued. "Many of those looking to
purchase a home, whether their first, an upgrade, or a recreational
property, stand able to take advantage of increased savings and
record-low interest rates."
Those who have been unable to transact are expected to return to
the market in the new year, ahead of an expected increase to
interest rates.
"While Omicron appears certain to delay the inevitable, monetary
policy will eventually tighten in the face of uncomfortably high
inflation," said Soper. "When policy makers signal that a rate hike
is on the way, we expect a pull-ahead effect, with buyers rushing
to market before borrowing costs increase materially. Those who
have pre-qualified with lower mortgage rates will also be under
time constraints to transact."
From a public safety standpoint, real estate brokerages and
their professionals in the field are by now well versed in the
safety protocols necessary to ensure the buying and selling process
is safe for their clients.
While pandemic-related lockdowns and a mandate to work remotely
drove up demand for larger homes with outdoor space from buyers who
might typically have purchased condominiums, the property segment
has rebounded as affordability wanes in the middle and upper ends
of the market.
"Demand for condos has picked up significantly in recent months,
especially in major cities like Toronto and Montreal," said Karen
Yolevski, chief operating officer, Royal LePage Real Estate
Services Ltd. "The price appreciation gap between condominiums and
detached properties is narrowing. This trend will continue in 2022,
as entry-level buyers are priced out of more expensive property
segments, and the revival of the downtown core continues. Young
professionals and those seeking a vibrant entertainment scene
generally gravitate to the city lifestyle."
Royal LePage 2022 Market
Survey Forecast Table: rlp.ca/2022forecast_table
MARKET SUMMARIES
Greater Toronto Area
In the Greater Toronto Area,
the aggregate price of a home in the fourth quarter of 2022 is
forecast to increase 11.0 per cent year-over-year to $1,256,500. During the same period, the median
price of a single-family detached property is expected to rise 10.0
per cent to $1,564,200, while the
median price of a condominium is forecast to increase 12.0 per cent
to $763,800. The GTA is the only
major region expected to see price appreciation in the condominium
segment surpass detached homes in 2022.
"Condos in the city of Toronto
and in the greater region have rebounded with vigour, after taking
a harder hit than any other major urban centre in the country at
the onset of the pandemic," said Cailey
Heaps, who leads the Heaps Estrin Team, Royal LePage Real
Estate Services Ltd. "For a short period of time, prices dipped,
and an onslaught of vacant units sent rental rates downward, but
that trend was short-lived. Not only have condo prices rebounded,
competition is heating up as entry-level buyers see them as an
affordable way to get onto the real estate ladder."
While the winter months translate to a seasonal slowdown in the
real estate market in some cities across Canada, Toronto's housing market remains active
year-round.
"As we saw last year at this time, cold weather and the holiday
season will do little to slow activity in Toronto. With tight competition and the
looming threat of an interest rate hike in the first half of 2022,
those who can transact now will not wait until spring, especially
if they can lock in a lower mortgage rate," said Heaps. "A large
number of newcomers are also expected to enter Canada next year and many of them will settle
in the GTA, putting upward pressure on prices."
Royal LePage 2022 Market
Survey Forecast Table: rlp.ca/2022forecast_table
Greater Montreal
Area
In th Greater Montreal Area,
the aggregate price of a home in the fourth quarter of 2022 is
forecast to increase 8.0 per cent year-over-year to $564,800. During the same period, the median
price of a single-family detached property is expected to rise 9.0
per cent to $648,600, while the
median price of a condominium is forecast to increase 6.5 per cent
to $447,300.
While detached homes have been the most highly sought-after
property type in 2021, strong demand for condominiums is expected
to reemerge in the new year, as potential buyers face tight
competition and rising prices in the detached and semi-detached
segments; not to mention, the anticipated first increase to
interest rates since March of 2020.
"The shortage of single-family homes is expected to boost demand
in the condominium market in the coming year," said Dominic St-Pierre, vice-president and general
manager, Royal LePage Quebec. "Currently, condos are the only
property type which are not being immediately absorbed. With an
increase in interest rates on the horizon, it is expected that many
first-time buyers will attempt to enter the real estate market
before their reduced borrowing capacities price them out of the
option of a larger home."
St-Pierre expects
multiple-offer scenarios will be less common in the coming year
than they have been in 2021.
"I anticipate the increase of housing supply will be gradual at
the start of the year, and more importantly once interest rates go
up. This could address some of the pent-up demand and offer new
opportunities to buyers."
Provided the Omicron variant does not impact border restrictions
again, immigration is expected to be a major driver of economic
growth in 2022, and will contribute to an increased demand for
housing in the Greater Montreal
Area.
Royal LePage 2022 Market
Survey Forecast Table: rlp.ca/2022forecast_table
Greater Vancouver
In Greater Vancouver, the
aggregate price of a home in the fourth quarter of 2022 is forecast
to increase 10.5 per cent year-over-year to $1,375,700. During the same period, the median
price of a single-family detached property is expected to rise 12.0
per cent to $1,892,800, while the
median price of a condominium is forecast to increase 8.0 per cent
to $766,800.
"We've been experiencing a chronic shortage of housing supply
for over a year, and inventory levels are steadily decreasing. This
continues to be a main driver of price appreciation in Vancouver and the greater region," said
Randy Ryalls, managing broker, Royal
LePage Sterling Realty. "Just about every listing receives multiple
offers and ultimately sells above the asking price, many without
conditions. This competitive environment makes it especially
difficult for first-time buyers to transact."
Ryalls added that inventory would have to double in order for
the region to return to a balanced market, as demand continues to
outpace supply.
"This time of year, it's not uncommon to see a significant
reduction in new listings as families prepare for the holiday
season and winter months. This means we could be heading into
January with historically low supply and pent-up demand from buyers
who weren't able to make a purchase in 2021," said Ryalls. "If
interest rates rise as expected, we are likely to see a surge in
demand at the beginning. However, higher borrowing rates will
eventually cool some of that demand in the entry-level segment of
the market, as prices become too far out of reach for some would-be
buyers."
Following a devastating year of floods and fires in British Columbia, Ryalls noted that the impact
on housing markets in and around the affected regions remains to be
seen.
Royal LePage 2022 Market
Survey Forecast Table: rlp.ca/2022forecast_table
Ottawa
In Ottawa, the aggregate price
of a home in the fourth quarter of 2022 is forecast to increase 9.0
per cent year-over-year to $806,600.
During the same period, the median price of a single-family
detached property is expected to rise 9.0 per cent to $946,100, while the median price of a condominium
is forecast to increase 6.0 per cent to $446,300.
"Demand is continuing to outpace supply in Ottawa and I believe it will remain strong in
2022, although the frenzied pace of the market is reducing in this
final quarter of the year," said Jason
Ralph, broker and president, Royal LePage Team Realty. "We
still have less than one month of inventory available. Compared to
an 'average year', 2021 was exceptional, even if activity levels
are beginning to slow."
Ralph noted that demand is being driven by first-time buyers and
retirees, while fewer GTA buyers are shopping for homes in
Ottawa today than at the height of
the pandemic.
"More than ever, local first-time buyers and newcomers to
Canada are choosing to buy in
Ottawa, as the region offers more
green space and greater affordability than other major cities.
Those looking in the city's neighbouring suburbs will find
themselves just a short commute from the downtown core," said
Ralph.
Royal LePage 2022 Market
Survey Forecast Table: rlp.ca/2022forecast_table
Calgary
In Calgary, the aggregate price
of a home in the fourth quarter of 2022 is forecast to increase 6.0
per cent year-over-year to $610,600.
During the same period, the median price of a single-family
detached property is expected to rise 6.0 per cent to $689,000, while the median price of a condominium
is forecast to increase 2.0 per cent to $229,500.
"Following the busiest September and October on record in
Calgary, real estate demand
continues to be very strong; enough to expect a very brisk spring
market," said Corinne Lyall, broker
and owner, Royal LePage Benchmark. "Without a significant boost in
inventory, we will continue to see upward pressure on prices. Even
still, Calgary remains an
affordable place to buy a home, compared to Canada's other major cities."
Lyall noted that major investments in revitalization projects in
the downtown core, including a new stadium and an LRT line - the
largest infrastructure investment in Calgary's history - are contributing to a
positive momentum that is making the city increasingly attractive
to young buyers.
"Calgary is very attractive to
young Canadians looking for affordable homes, good job
opportunities and a more balanced lifestyle. Calgarians have access
to mountains, lakes and national parks, without having to give up
the comforts of city life," said Lyall.
Royal LePage 2022 Market
Survey Forecast Table: rlp.ca/2022forecast_table
Edmonton
In Edmonton, the aggregate
price of a home in the fourth quarter of 2022 is forecast to
increase 5.0 per cent year-over-year to $450,500. During the same period, the median
price of a single-family detached property is expected to rise 6.0
per cent to $500,300, while the
median price of a condominium is forecast to increase 1.0 per cent
to $184,800.
"There are a lot of good news stories in the local economy,
which continues to bolster the confidence of first-time buyers to
enter the market and young owners to move up," said Tom Shearer, broker and owner, Royal LePage
Noralta Real Estate. "Demand continues to outpace available supply,
particularly for homes in the half-million to $900,000 range."
Shearer added that while winter weather does typically slow the
Edmonton market, a surge of
activity is expected once interest rates rise in 2022, as those who
have secured a hold on a lower rate will look to make a purchase
quickly.
"Heading into 2020, Edmonton's
economy was just beginning to normalize following years of
recession. The real estate boom spurred by the global pandemic
accelerated that recovery. Once borrowing costs increase to a
certain level, the housing market will start to normalize to
pre-pandemic levels once again."
Royal LePage 2022 Market
Survey Forecast Table: rlp.ca/2022forecast_table
Halifax
In Halifax, the aggregate price
of a home in the fourth quarter of 2022 is forecast to increase
10.0 per cent year-over-year to $519,200. During the same period, the median
price of a single-family detached property is expected to rise 10.5
per cent to $594,500, while the
median price of a condominium is forecast to increase 8.0 per cent
to $418,000.
"Halifax has approximately two
weeks of available inventory. The chronic supply shortage is
impacting sales volumes, which I expect will be lower in 2022,
despite continued strong demand from buyers within and outside of
the Maritimes," said Matt
Honsberger, broker and owner, Royal LePage Atlantic.
"Out-of-province demand remains a main driver of price
appreciation, and is expanding to areas outside of the city centre,
including Annapolis Valley and other recreational regions a short
drive from downtown."
The provincial government has yet to approve a proposed tax on
homebuyers who are not current residents of Nova Scotia. The tax, if passed, could have an
impact on the rise in buyer demand which has come largely from
Ontario over the past year and a
half.
Honsberger noted that while buyers continue to be aggressive in
their searches, some sellers will wait until spring to list their
properties. This could result in a boost of inventory in the new
year.
"Any additional supply is welcome in a market as competitive as
this one. However, most sellers will also be looking to make a
purchase in the same region," added Honsberger. "A significant
number of new developments are currently under way on the outskirts
of Halifax, including in
Dartmouth, Elmsdale, Lantz and Bedford. But, completion will take at least 18
to 24 months."
Royal LePage 2022 Market
Survey Forecast Table: rlp.ca/2022forecast_table
Winnipeg
In Winnipeg, the aggregate
price of a home in the fourth quarter of 2022 is forecast to
increase 6.0 per cent year-over-year to $372,100. During the same period, the median
price of a single-family detached property is expected to rise 6.0
per cent to $413,400, while the
median price of a condominium is forecast to increase 5.0 per cent
to $255,200.
"Despite following a record year for real estate, 2021 has seen
exceptional growth in Winnipeg,"
said Michael Froese, broker and
manager, Royal LePage Prime Real Estate. "Inventory is tighter
today than at this time last year, and demand continues to rise.
Half of the homes listed in the region are selling in
multiple-offer scenarios, which was not the norm prior to the
pandemic."
Winnipeg remains a relatively
affordable place to purchase a home and live, compared to other
major cities in Canada. Froese
noted that increased competition and low inventory are causing
fatigue for both buyers and sellers. Many homeowners are hesitant
to list their homes for sale, due to concern that they will not be
able to find a new property to purchase.
"First-time buyers make up a large part of demand in the city.
Many of them have decided to put their home searches on hold until
spring, in the hopes there will be a boost in supply. It's
especially difficult for young buyers who are getting priced out of
the detached home segment, which makes up about three quarters of
our total housing stock," added Froese. "Condo prices are
increasing more rapidly, as demand for more affordable units
rises."
While the pace of the market typically slows during the winter
months, Froese anticipates a brisk spring market is in store for
Winnipeg.
Royal LePage 2022 Market
Survey Forecast Table: rlp.ca/2022forecast_table
Regina
In Regina, the aggregate price
of a home in the fourth quarter of 2022 is forecast to increase 6.0
per cent year-over-year to $376,300.
During the same period, the median price of a single-family
detached property is expected to rise 6.0 per cent to $408,100, while the median price of a condominium
is forecast to increase 4.0 per cent to $208,000.
"November was a very busy month in Regina, although activity levels are likely to
taper off as we head into the holiday season," said Mike Duggleby, broker and owner, Royal LePage
Regina Realty. "Unmet demand will return in the new year and
continued supply shortages will result in a brisk spring
market."
Duggleby expects a renewed surge of demand from newcomers and
first-time buyers will hit the market in the spring of 2022.
"Significant investment in the potash industry and canola
processing will lead to new job creation in Regina, attracting more people to the region.
This increased demand will continue to put upward pressure on
prices in an already tight market."
Duggleby expects a rise in condominium demand once Canada's increased immigration targets are
reached.
Royal LePage 2022 Market
Survey Forecast Table: rlp.ca/2022forecast_table
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About the Royal LePage Market Survey Forecast
The Royal LePage Market Survey Forecast provides year-over-year
price expectations for Canada's
nine largest markets. Housing values are based on the Royal LePage
National House Price Composite, produced through the use of company
data in addition to data and analytics from its sister company, RPS
Real Property Solutions, the trusted source for residential real
estate intelligence and analytics in Canada. Commentary on housing and forecast
values are provided by Royal LePage
residential real estate experts, based on trend analysis and market
knowledge.
About Royal LePage
Serving Canadians since 1913, Royal
LePage is the country's leading provider of services to real
estate brokerages, with a network of approximately 19,000 real
estate professionals in over 600 locations nationwide. Royal LePage is the only Canadian real estate
company to have its own charitable foundation, the Royal LePage
Shelter Foundation, dedicated to supporting women's and children's
shelters and educational programs aimed at ending domestic
violence. Royal LePage is a
Bridgemarq Real Estate Services Inc. company, a TSX-listed
corporation trading under the symbol (TSX: BRE). For more
information, please visit www.royallepage.ca.
_____________________________
1 Royal
LePage's aggregate home price is based on a weighted model using
median prices and includes all housing types.
|
2 Price
data, which includes both resale and new build, is provided by
Royal LePage's sister company RPS Real Property Solutions, a
leading Canadian valuation company. Price forecast reflects Q4 2022
over Q4 2021 projections.
|
SOURCE Royal LePage Real Estate Services