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Royal LePage forecasts a 9% increase in aggregate home prices across Canada by the end of the year.

Housing prices are expected to rise by 9 percent in the fourth quarter of 2024 compared to the previous year, as per a forecast by Royal LePage that noted stronger-than-expected results at the beginning of the year.

According to the real estate company’s recently released house price survey, the aggregate price of a home in Canada increased by 4.3 percent year-over-year to $812,100 in the first quarter of 2024.

Phil Soper, President, and CEO of Royal LePage stated that the first quarter saw sidelined buyers resuming their purchase plans due to an anticipated more competitive housing market if interest rates drop as expected during the summer.

“Consistent with our previous forecast, the market did reach a critical tipping point in the first quarter of 2024 when home prices bottomed out and began to appreciate again,” Mr. Soper said in a press release.

“Clearly, more and more buyers are motivated by the need to get ahead of rising home prices, rather than adopting the strategy of waiting for mortgage rates to fall.”

The real estate company previously forecast that aggregate home prices would increase by 5.5 percent in the fourth quarter. The new prediction of 9 percent would set the aggregate price at $860,555.

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The survey found that aggregate prices of homes in Toronto and Montreal are projected to increase by 10 percent and 8.5 percent respectively in the last quarter of the year, surpassing price gains in Calgary, which was initially expected to witness the highest increase in home values this year.

“While most markets across the country saw a dip in property values last year, the Calgary real estate market defied the trend by continuing to experience home price gains,” Mr. Soper noted. “While activity remains robust and prices continue to climb in Alberta, our research indicates that buyer demand in the two largest urban centers in the country is strongest. We now anticipate Toronto and Montreal to lead in home price appreciation this year.”

‘Severe Shortage of Housing’

Mr. Soper not only foresees a lively spring market but also an “uncomfortably busy fall.”

“It is evident that we are swiftly transitioning from a buyers’ market back to a seller-driven environment,” he remarked, attributing the expected rate cut by the central bank to an increase in activity.

The Bank of Canada raised its benchmark interest rate to 5 percent in March 2022. The central bank decided to keep it stagnant for the sixth consecutive time on April 10, stating the need to observe if the “downward momentum” in inflation is sustained before considering rate cuts. Most economists anticipate a rate cut by the bank this summer.

After the rate cut, Mr. Soper anticipates an influx of buyers into the Canadian real estate market.

“Once the central bank makes a move, and the first much-anticipated rate cut is implemented, even if it’s just by 25 basis points, I expect to see a steeper increase in price appreciation when the rate-focused crowd enters the market,” he predicted.

However, interest rates are not the sole concern. Mr. Soper emphasized the ongoing housing shortage as a challenge for potential homebuyers. A scarcity of homes leads to price hikes, intensifying market competitiveness.

“Despite an increase in listings reported by real estate boards across the country in anticipation of the spring market rush, nearly every region from coast to coast suffers from a chronic shortage of housing supply,” Mr. Soper remarked. “While we anticipate that lower interest rates will draw more buyers back, the primary driver of rising prices remains the severe housing shortage in markets big and small across the nation.”

The company mentioned that as competition for homes heats up, price increases can be expected in all markets. The projected 10 percent price surge in the GTA by the end of the year will elevate the aggregate price to $1.24 million, while Montreal’s expected 8.5 percent increase will bring aggregate home prices to $614,987.

Prices in Vancouver are forecasted to increase by 5.5 percent, setting the aggregate home price at $1.29 million, as per Royal LePage. In Calgary, home prices will rise by 8 percent, with aggregate prices climbing to $716,580.

This latest forecast comes after Royal LePage predicted a surge in cottage prices throughout Canada this year. The company mentioned that the increase in single-family recreational home prices in 2024 will impact all provincial markets, with Ontario experiencing the highest climb compared to other provinces.

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