Updated Year-End National Home Price Forecast Reflects Recent Market Dip: Royal LePage

Q3 Key Points:

- Predicted Q4 2023 Canadian home price to rise by 7.0% YoY, a minor dip from the prior 8.5% projection.

- In Q3 2023, Canadian homes saw a 3.6% YoY increase in aggregate price, and a quarter-on-quarter dip of 0.8%.

- Greater Toronto and Vancouver regions experienced Q3 price declines of 2.8% and 1.8%, while Greater Montreal saw a 0.6% quarterly hike.

- Over half (57%) of regions reported a Q3 quarterly decline, highlighting softened activity.

- Royal LePage praises the federal GST rebate initiative promoting new rental housing construction.

October 12, 2023: The latest Royal LePage House Price Survey reveals a 3.6% YoY growth, bringing the Canadian home aggregate price to $802,900 in Q3 2023. However, the quarter witnessed a 0.8% dip, highlighting that although many adjusted to higher borrowing costs, increased interest rates have left marks on several markets. With the Bank of Canada's lending rate at 5.0%, following two summer rate hikes, market dynamics are evident.

Phil Soper, Royal LePage CEO, remarked, "Despite the recent market slowdown, year-over-year prices remain positive. This stable environment contrasts starkly with 2022's third-quarter downturn. The overall Canadian housing market, though exhibiting tepid trading volumes in various regions, remains robust with a growing latent demand. We foresee little fluctuation in home prices for the rest of the year."

The Royal LePage National House Price Composite is curated from 63 of Canada's prominent real estate markets. By housing type, the national median price for detached homes rose 3.4% YoY to $833,600, whereas condos experienced a 3.8% YoY increase, reaching $587,400. Quarter-on-quarter data displayed a 1.0% decrease for detached homes and a negligible 0.1% rise for condos.

Soper added, "Low inventory levels in many areas are seeing marginal improvement. Still, the available home quantity lags behind demand, leading to consistent property price hikes. Our housing scenario remains multifaceted with a burgeoning younger demographic seeking homes, changing household structures, and an aging boomer population. Alongside, we have a surge in retirements and an imperative to welcome more immigrants. Their housing needs further pressurize the already stretched supply."

Economic experts are torn on the Bank of Canada's upcoming rate decision after July's flat GDP growth and new employment data. If September reveals a spike in inflation, a lending rate increase becomes probable.

Soper also emphasized the shift from historically low mortgage rates during the pandemic to the current norm, leading to a transient market adjustment.

Home value retention, despite the sales lull, can be attributed to robust employment, influencing the extremely low mortgage delinquency rates. 

Praising the new legislation offering a 5% GST rebate on new rental housing, Soper said, "This initiative is commendable. It's an important step towards amplifying Canada's rental housing supply, particularly in areas like Toronto and Vancouver."

Royal LePage's Revised Forecast:

The final 2023 quarter is projected to see a 7.0% YoY increase in Canadian home aggregate prices, revised due to Q3's softer market activity. Soper concluded, "Although recent activity indicates a slowdown, we remain optimistic about the market's resilience for the rest of the year."

VANCOUVER Insights:

Greater Vancouver's Q3 2023 aggregate home price grew by a modest 0.1% YoY to $1,251,900. Randy Ryalls of Royal LePage Sterling Realty shared, "While there's evident demand, high borrowing costs are challenging many prospective buyers." Despite this, Royal LePage anticipates a 7.0% YoY rise in Greater Vancouver's home aggregate price for Q4 2023.

About Royal LePage:

Since 1913, Royal LePage, a leading Canadian real estate services provider, has been serving Canadians. It is proud to have its charity foundation, the Royal LePage Shelter Foundation, supporting women's shelters and violence prevention for 25 years. As a member of the Bridgemarq Real Estate Services Inc. family, it trades under the symbol TSX:BRE on the TSX. Visit www.royallepage.ca for more details.