Second quarter records first
quarter-over-quarter national decline since Q1 2019
Second quarter
highlights:
- National aggregate home price increases 12.1% year-over-year in
second quarter of 2022; decreases 4.9% quarter-over-quarter.
- Royal LePage reduces national
home price forecast to +5.0% in fourth quarter of 2022; expects
home prices to hold relatively flat through the second half of the
year in greater regions of Toronto
and Vancouver. Greater Montreal Area expected to see
continued price appreciation.
- An uneven market recovery is expected as some regions
experience continued price appreciation, while others soften.
- Interprovincial migration to affordable real estate markets
supports home price growth in Alberta, Prairies and Atlantic Canada.
- Royal LePage cautions policy
makers that growing inventory is masking an acute urgency to solve
Canada's housing supply
crisis.
TORONTO, July 13,
2022 /CNW/ - According to the Royal LePage House
Price Survey released today, the
aggregate1 price of a home in
Canada increased 12.1 per cent
year-over-year to $815,000 in the
second quarter of 2022. On a quarterly basis, the aggregate price
of a home in Canada decreased 4.9
per cent in the second quarter after reaching record year-over-year
highs in Q1. This is reflective of softening home prices in markets
that saw exceptional price growth during the pandemic. The second
quarter of 2022 is the first quarter in more than three years
(since Q1 2019) to post a quarter-over-quarter decline in home
prices.
Royal LePage is forecasting that
the aggregate price of a home in Canada will increase 5.0 per cent in the
fourth quarter of 2022, compared to the same quarter last year. The
forecast has been revised downward from the previous quarter
following more aggressive than expected interest rate hikes by the
Bank of Canada, resulting in an
expected temporary drop in demand in parts of southern Ontario and British
Columbia.
"Some of the heat that was driving the market cooled during the
quarter as rising interest rates coupled with economic uncertainty
undermined consumer confidence and pushed buyers to the sidelines,"
said Phil Soper, president and CEO
of Royal LePage. "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. 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. I expect this highly
unusual downward movement in home values will be short-lived as the
country's chronic housing shortage has not been resolved.
"Barring a sharp increase in the inventory of properties for
sale in this country, which seems unlikely given our exceptionally
low level of unemployment, growing population and miniscule rate of
mortgage default, we expect that the second quarter produced most
of the price declines we will see this cycle," continued Soper.
The Royal LePage National House Price Composite is compiled from
proprietary property data, nationally and in 62 of the nation's
largest real estate markets. When broken out by housing type, the
national median price of a single-family detached home rose 12.4
per cent year-over-year to $859,500,
while the median price of a condominium increased 12.2 per cent
year-over-year to $589,000. Price
data, which includes both resale and new build, is provided by
Royal LePage's sister company RPS
Real Property Solutions, a leading Canadian real estate valuation
company.
Supporting the expectation that resale home prices will hold
their value for the remainder of 2022 is continued household
formation from peak millennials who are reaching traditional
home-buying age, high levels of immigration, a healthy job market
and the high construction cost of new homes. Since 1980, there have
only been seven instances of a 3-month decline in resale home
prices of 10 per cent or more, with the most recent instance
occurring in May, 2022.2
"We don't expect to see much movement in housing values through
the balance of the year," added Soper. "Canada is experiencing strong growth in
household formation, so positive economic news, such as a signal
that rates have reached a level where inflation can be managed,
should trigger a return to rising property values. The small
percentage of consumers who purchased properties at 2022's
February/March peak will have seen a short-term decline in the
value of their homes, but there is little doubt they will soon make
up that lost ground."
Royal LePage is providing caution
to policy-makers who may see growing inventory as a sign that
Canada's housing supply crisis has
become less urgent compared to election periods when Canadians from
coast to coast expressed concern and sought action to improve the
supply of housing.3
"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," continued Soper. "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."
In search of a comfortable lifestyle that affordable housing
provides, households are continuing to leave the more expensive
regions of the country and migrate towards those where housing is
more affordable. During the first quarter of 2022, there was
migration out of Ontario and
towards British Columbia,
Alberta, Quebec and Nova
Scotia, which is supporting home price growth in those
regions. Excluding the greater regions of Toronto and Vancouver and the city of Ottawa, all remaining major forecast regions
saw quarter-over-quarter aggregate home price growth (Halifax, Montreal, Winnipeg, Regina, Calgary and Edmonton).
________________________________
|
1
Aggregate prices are calculated using a weighted average of the
median values of all housing types collected. Data is provided by
RPS Real Property Solutions and includes both resale and new
build.
|
|
2 CREA
Stats Centre, Actual Monthly Resale Data (not Seasonally Adjusted)
for the National Average Resale Price. A 3-month decline is based
on comparing the current National Average Resale Price to the
monthly average 3 months prior (May 2022 versus February
2022).
|
|
3
Canadians are taking their housing affordability concerns all
the way to the ballot box in this federal election; Ontario voters
head to the polls with housing supply crisis top of
mind
|
Royal LePage House Price Survey
Chart: rlp.ca/house-prices-Q2-2022
Royal LePage Forecast Chart:
rlp.ca/market-forecast-Q2-2022
REGIONAL SUMMARIES
Greater
Toronto Area
The aggregate price of a home in the Greater Toronto Area increased 12.8 per cent
year-over-year to $1,167,000 in the
second quarter of 2022. On a quarterly basis, the aggregate price
of a home in the GTA decreased 8.1 per cent in the second quarter,
after reaching record year-over-year highs in Q1. This is the first
quarterly decline in the region since Q1 of 2018.
Broken out by housing type, the median price of a single-family
detached home increased 10.5 per cent to $1,437,600, while the median price of a
condominium increased 17.3 per cent year-over-year to $738,800 in the second quarter of 2022.
"The city of Toronto and the
greater region, along with many secondary cities in the Golden
Horseshoe, 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. "Buyer behaviour
has shifted. They are in a wait-and-see pattern, assessing the
impact of further expected interest rate hikes and rising
inflation. For the first time since the start of the pandemic, the
real estate market is experiencing a more normal summer slowdown in
activity."
Yolevski noted that the softening market is providing a rare
opportunity to first-time buyers who have been unable to transact
over the last two years. It's also creating an opportunity for
renters who are considering buying, as purchasing has become
slightly more attractive.
"We've reached a tipping point for renters, as rental rates
continue to increase and inventory in the resale market rises,"
said Yolevski. "Those who are able to save enough of a down payment
may feel they have more choice in today's market."
In the city of Toronto, the
aggregate price of a home increased 11.7 per cent year-over-year to
$1,245,600 in the second quarter of
2022. During the same period, the median price of a single-family
detached home increased 9.3 per cent to $1,694,900, while the median price of a
condominium increased 6.8 per cent to $742,600.
"The fundamentals of Toronto's
housing market have not changed. While inventory has been creeping
up due to consumers moving to the sidelines, the housing supply
crisis in Toronto remains a
significant long-term challenge," said Yolevski.
Yolevski expects that prices will remain flat through the
remainder of 2022.
Royal LePage is forecasting that
the aggregate price of a home in the Greater Toronto Area will increase 3.0 per
cent in the fourth quarter of 2022, compared to the same quarter
last year. The previous forecast has been revised downward, as a
result of softening demand due to more aggressive than expected
interest rate hikes by the Bank of Canada.
Royal LePage House Price Survey
Chart: rlp.ca/house-prices-Q2-2022
Royal LePage Forecast Chart:
rlp.ca/market-forecast-Q2-2022
Greater
Montreal Area
The aggregate price of a home in the Greater Montreal Area increased 13.9 per cent
year-over-year to $585,700 in the
second quarter of 2022. Broken out by housing type, the median
price of a single-family detached home increased 18.1 per cent to
$660,400, while the median price of a
condominium increased 11.7 per cent to $452,500 during the same period.
"We are seeing a shift in buyer behaviour in the real estate
market, with rising interest rates being the main factor,"
confirmed Marc Lefrançois, licensed real estate broker at Royal
LePage Tendance in Montreal. "As
the Bank of Canada announced
interest rate hikes against the backdrop of high inflation, buyers
began to seriously reassess their financial capacity, which reduced
their enthusiasm and slowed down demand for properties in June.
Sellers are not adjusting as quickly and are still keeping their
expectations very high regarding the market value of their
property. We are entering a new chapter signalling healthier price
appreciation in the Greater Montreal
Area and in the majority of Quebec markets during the second half of
2022," said Lefrançois.
In Montreal Centre, the aggregate price of a home increased 9.3
per cent year-over-year to $702,700
in the second quarter of 2022. During the same period, the median
price of a single-family detached home increased 6.2 per cent to
$1,114,600, while the median price of
a condominium increased 6.9 per cent to $535,100.
In the West Island of Montreal,
there has been an apparent shift in buyer behaviour as of May, due
to significant interest rate hikes and an increase in inventory.
There was increased activity for properties below the
million-dollar mark, with buyers rushing to purchase at previously
locked in lower interest rates, before their rate guarantee
expires.
"With financing rates approaching five per cent and set to rise
even higher, there are budget implications for buyers," noted
Sean Broady, licensed real estate
broker at Royal LePage Elite in Beaconsfield. "Market uncertainty and higher
interest rates have put a damper on sales in the over 1-million-dollar price range as supply begins to
outpace demand."
Royal LePage is forecasting that
the aggregate price of a home in the Greater Montreal Area will increase 12.5 per
cent in the fourth quarter of 2022, compared to the same quarter
last year. This is consistent with the Company's earlier forecast
for the region.
Royal LePage House Price Survey
Chart: rlp.ca/house-prices-Q2-2022
Royal LePage Forecast Chart:
rlp.ca/market-forecast-Q2-2022
Greater
Vancouver
The aggregate price of a home in Greater Vancouver increased 9.1 per cent
year-over-year to $1,311,900 in the
second quarter of 2022. For the first time since Q3 of 2019,
Greater Vancouver has posted a
quarter-over-quarter decline in the aggregate home price, down 4.1
per cent over the first quarter of 2022.
Broken out by housing type, the median price of a single-family
detached home increased 12.1 per cent to $1,822,300, while the median price of a
condominium increased 12.0 per cent to $783,700 during the same period.
"Real estate activity in Greater
Vancouver has slowed over the last few months. 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," said Randy
Ryalls, general manager, Royal LePage Sterling Realty.
"Scenarios are normalising. We are seeing an uptick in average days
on market, buyers are taking a step back and putting conditions
into their offers again, and sellers are no longer holding back
offers. These are all signs that we are moving in the direction of
more normal market conditions."
In the city of Vancouver, the
aggregate price of a home increased 11.7 per cent year-over-year to
$1,457,200 in the second quarter of
2022. During the same period, the median price of a single-family
detached home increased 12.7 per cent to $2,649,300, while the median price of a
condominium increased 6.0 per cent to $820,200.
"Inventory continues to increase, and sales are down
significantly from their peak in February and March," said Ryalls.
"This is good news for buyers, as some of those who were unable to
transact in the last two years can now take advantage of this
opportunity to get into the market with less competition and a bit
more selection."
Ryalls noted that evolving buyer behaviour is having an impact
on the market.
"Many would-be buyers have moved to the sidelines as interest
rates continue to increase. In addition, some are waiting to see
what effect the proposed cooling-off period will have on the
market. The B.C. government is currently reviewing recommendations
from the provincial regulator," said Ryalls.
Ryalls expects the typical pre-pandemic slowdown to continue
this summer, followed by a slight boost of activity in the
fall.
Royal LePage is forecasting that
the aggregate price of a home in Greater
Vancouver will increase 5.0 per cent in the fourth quarter
of 2022, compared to the same quarter last year. The previous
forecast has been revised downward, as a result of softening demand
due to more aggressive than expected interest rate hikes by the
Bank of Canada.
Royal LePage House Price Survey
Chart: rlp.ca/house-prices-Q2-2022
Royal LePage Forecast Chart:
rlp.ca/market-forecast-Q2-2022
Ottawa
The aggregate price of a home in Ottawa increased 11.5 per cent year-over-year
to $800,300 in the second quarter of
2022. While home prices continue to show year-over-year growth, on
a quarterly basis, the aggregate price of a home in Ottawa decreased 1.1 per cent in the second
quarter of 2022.
Broken out by housing type, the median price of a single-family
detached home increased 10.0 per cent to $930,500, while the median price of a condominium
decreased 1.0 per cent to $416,900
during the same period.
"Despite recent interest rate hikes and increasing home prices,
buyer demand remains strong in the city of Ottawa. However, in recent months homebuyers
are proving more cautious, taking more time before making an offer
and reintroducing conditions," said John
Rogan, broker of record, Royal LePage Performance Realty.
"Inventory is beginning to creep up slowly, but demand continues to
outpace supply. And, in some high-demand areas, a low supply of
housing continues to drive multiple-offer scenarios."
Rogan added that the city's healthy economy, booming job market
and relative affordability continue to attract buyers from other
parts of the province and across Canada.
"Ottawa's economy is
historically very stable and the city remains an attractive
destination, both for Canadians and internationals. It offers a
desirable lifestyle for those looking for an alternative to the
city of Toronto."
Rogan expects the seasonal summer slowdown in activity and
expected further interest rate hikes will put some downward
pressure on prices in the months ahead, but believes prices will
level off by the end of the year.
Royal LePage is forecasting that
the aggregate price of a home in Ottawa will increase 10.0 per cent in the
fourth quarter of 2022, compared to the same quarter last year. The
previous forecast has been revised downward to reflect a shift to a
more balanced market.
Royal LePage House Price Survey Chart:
rlp.ca/house-prices-Q2-2022
Royal LePage Forecast Chart: rlp.ca/market-forecast-Q2-2022
Calgary
The aggregate price of a home in Calgary increased 8.4 per cent year-over-year
to $616,300 in the second quarter of
2022. Broken out by housing type, the median price of a
single-family detached home increased 10.9 per cent to $707,700, while the median price of a condominium
increased 4.6 per cent to $236,500
during the same period.
"Calgary's housing market
remains very tight. Due to a lack of supply in detached houses,
there continues to be competition from both local buyers as well
those moving to Calgary from other
provinces," said Corinne Lyall,
broker and owner, Royal LePage Benchmark. "Unit sales are
historically high and while we do see new construction being built,
it has not kept up with demand. Good product that comes to market,
whether new build or resale, is being quickly absorbed."
Lyall noted that a lack of rental properties has put upward
price pressure on the resale market as rising costs and lack of
availability have made purchasing a home more attractive for those
who are able to get into the market.
"Buyers continue to find excellent value in Calgary's condo market. The region has
struggled with over-supply in recent years, which resulted in
excellent selection and less competition than the single-family
home market," said Lyall. "Increasingly, we are seeing investors
and property managers convert condos into long-term rentals. While
this is improving rental availability, it is also creating more
competition for buyers as product is coming off the market."
Royal LePage is forecasting that
the aggregate price of a home in Calgary will increase 8.0 per cent in the
fourth quarter of 2022, compared to the same quarter last year. The
forecast remains unchanged from the previous quarter as consumer
confidence remains high, driven by a healthy economy and an
affordable housing market that continues to drive migration to the
province.
Royal LePage House Price Survey
Chart: rlp.ca/house-prices-Q2-2022
Royal LePage Forecast Chart:
rlp.ca/market-forecast-Q2-2022
Edmonton
The aggregate price of a home in Edmonton increased 6.8 per cent year-over-year
to $459,200 in the second quarter of
2022. Broken out by housing type, the median price of a
single-family detached home increased 6.8 per cent to $498,800, while the median price of a condominium
increased 5.5 per cent to $212,000
during the same period.
"Real estate in Edmonton had a
strong start to the year and it pulled a lot of the buyer demand to
earlier in the year. June activity slowed to a pace that is more
typical of July," said Tom Shearer,
broker and owner, Royal LePage Noralta Real Estate. "We are still
in a seller's market and inventory has been slowly building and
buyers are finding selection is starting to improve. When they do
find the right home, there are fewer competing offers."
Shearer added that Edmonton's
real estate market is continuing to see demand from out-of-province
buyers who are moving to the area, often without employment.
"Edmonton's healthy job market
and affordable homes offer a significant lifestyle boost for people
willing to move from high priced cities. New construction is
struggling to keep up with the demand," Shearer added.
Royal LePage is forecasting that
the aggregate price of a home in Edmonton will increase 9.0 per cent in the
fourth quarter of 2022, compared to the same quarter last year. The
forecast remains unchanged from the previous quarter as consumer
confidence remains high, driven by a healthy economy and an
affordable housing market that continues to drive migration to the
province.
Royal LePage House Price Survey
Chart: rlp.ca/house-prices-Q2-2022
Royal LePage Forecast Chart:
rlp.ca/market-forecast-Q2-2022
Halifax
The aggregate price of a home in Halifax increased 13.8 per cent year-over-year
to $525,800 in the second quarter of
2022. Broken out by housing type, the median price of a
single-family detached home increased 12.7 per cent to $596,400, while the median price of a condominium
increased 13.5 per cent to $430,700
during the same period.
"Halifax's real estate market
is shifting to a more healthy market. Buyers are able to put
conditions on their purchase offers and local buyers are
successfully transacting with less competition from outside the
province," said Matt Honsberger,
broker and owner, Royal LePage Atlantic.
Honsberger added that an increase in inventory has offered
buyers more choice but has not resulted in lower prices.
"It is a great time for move-up buyers because they are
confident in their ability to find their next home, while selling
their existing home at current market value," said Honsberger.
"Those who have struggled to buy over the last year or two now find
themselves with an opportunity to get into the market with less
competition."
Royal LePage is forecasting that
the aggregate price of a home in Halifax will increase 9.0 per cent in the
fourth quarter of 2022, compared to the same quarter last year. The
previous forecast has been revised downward to reflect a softening
in buyer demand.
Royal LePage House Price Survey
Chart: rlp.ca/house-prices-Q2-2022
Royal LePage Forecast Chart:
rlp.ca/market-forecast-Q2-2022
Winnipeg
The aggregate price of a home in Winnipeg increased 11.5 per cent
year-over-year to $392,600 in the
second quarter of 2022. Broken out by housing type, the median
price of a single-family detached home increased 10.9 per cent to
$433,300, while the median price of a
condominium increased 4.5 per cent to $252,900 during the same period.
"Over the last month we've seen a significant boost in inventory
and a slight dip in demand, following very strong sales activity
and price gains in April and May. The spring market got off to a
much later start due to the extended winter weather," said
Michael Froese, broker and manager,
Royal LePage Prime Real Estate. "Now that buyers have more
selection and less competition, I think we'll start to see prices
level off. And, with interest rates expected to increase further,
it's going to create some breathing room for buyers in the months
ahead."
Froese noted that buyers are quick to adapt their behaviour to
changing market conditions.
"Almost immediately we've seen a shift. Buyers are taking
advantage of reduced competition and writing conditional offers
again, including subject to sale, inspection and financing. Sellers
tend to hold on to expectations a little longer when faced with a
transitioning market," said Froese. "It feels like we are moving
towards a healthier, more balanced environment."
Froese expects the slowdown to persist through the summer months
and anticipates another rush of demand in the fall.
Royal LePage is forecasting that
the aggregate price of a home in Winnipeg will increase 8.0 per cent in the
fourth quarter of 2022, compared to the same quarter last year. The
forecast remains unchanged from the previous quarter as consumer
confidence remains high, driven by a healthy economy and an
affordable housing market that continues to drive migration to the
province.
Royal LePage House Price Survey
Chart: rlp.ca/house-prices-Q2-2022
Royal LePage Forecast Chart:
rlp.ca/market-forecast-Q2-2022
Regina
The aggregate price of a home in Regina increased 9.8 per cent year-over-year
to $375,600 in the second quarter of
2022. Broken out by housing type, the median price of a
single-family detached home increased 12.1 per cent to $409,000, while the median price of a condominium
increased 4.1 per cent to $204,600
during the same period.
"Buyers are reacting to the current uncertainty in the market.
In the last month, we've seen some frenzied buying among those with
mortgage rate holds set to expire shortly, or those looking to
transact prior to further expected rate hikes," said Mike Duggleby, broker and owner, Royal LePage
Regina Realty. "While interest rates remain historically low, these
rapidly rising rates coupled with record high home prices are
proving stressful for many of today's first-time buyers."
Duggleby noted that sales are down slightly compared to the same
quarter last year, and inventory is up year-to-date.
"The supply of homes is increasing and I expect this trend will
continue through the summer months. However, inventory remains well
below historic norms. In some cases, although fewer than earlier in
the year, well-priced properties in popular neighbourhoods are
still selling in multiple-offer scenarios," said Duggleby.
Royal LePage is forecasting that
the aggregate price of a home in Regina will increase 7.0 per cent in the
fourth quarter of 2022, compared to the same quarter last year. The
forecast remains unchanged from the previous quarter as consumer
confidence remains high, driven by a healthy economy and an
affordable housing market that continues to drive migration to the
province.
Royal LePage House Price Survey
Chart: rlp.ca/house-prices-Q2-2022
Royal LePage Forecast Chart:
rlp.ca/market-forecast-Q2-2022
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About the Royal LePage House Price
Survey
The Royal LePage House Price Survey provides information on the
most common types of housing, nationally and in 62 of the nation's
largest real estate markets. Housing values in the Royal LePage
House Price Survey are based on the Royal LePage Canadian Real
Estate Market Composite, produced quarterly 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 their opinions 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.
SOURCE Royal LePage Real Estate Services