With prices for two-storey homes rising 8.3 per cent to $730,453 in the second quarter of 2014, Toronto’s housing market momentum cannot be matched by any other city in Canada.
And the momentum isn’t expected to fade any time soon. By the end of 2014, national brokerage Royal LePage forecasts prices in Canada’s largest city will rise 8.1 per cent over 2013, much higher than the expected Canada-wide annual increase of 5.1 per cent and the city’s closest competitors, Vancouver (7.1 per cent) and Calgary (5.5 per cent).
Royal LePage’s House Price Survey and Market Survey Forecast, released today, also showed a strong year-over-year price increase in the city’s ever-contentious condo segment. Standard condo prices rose 5.4 per cent to $380,453 in the second quarter.
Meanwhile, detached bungalows saw a price jump of 7.2 per cent to an average price of $611,906.
“There continues to be heightened demand for real estate in the core of the city, largely from immigrants coming to Canada for the first time and professionals from the 905 area looking to cut down on their commute,” said Gino Romanese, Royal LePage’s Senior Vice President.
“We are experiencing an extended period of insufficient supply, particularly with bungalows and two-storey homes. So long as this persists, we will continue to see upward pressure on homes in Toronto.”
Romanese also attributed elevated prices in the second quarter to the extended winter, noting that the brokerage is still seeing multiple offers on competitively priced properties.
Focusing on condos, he said that investors are helping to push up the average price for this housing type.
“Many of these properties are being bought and held as a long-term investment, rather than being flipped and sold for a quick profit. This shows the high confidence investors have in the safety and stability of the city’s real estate,” he said.
Looking to the national picture, a supply shortage is causing prices to spike in Canada’s big cities, which in turn is concealing moderate price appreciation nationally, Royal LePage said in its report.
“While a widening affordability gap in Canada’s largest urban centres is characterizing the national market Canadians read about daily, year-over-year house price increases in most regions of the country are presently tracking below the historical average,” said Royal LePage President Phil Soper.
Last week, TD Economics revised its Canadian existing home prices forecast upwards. While the bank had initially predicted that price growth would slow in 2014, economist Diana Petramala wrote that prices are now expected to rise between five and six per cent by the end of the year.
In an apparent nod to these formerly moderate 2014 outlooks, Soper said that Royal LePage’s national forecast for the year predicted a comparatively higher level of price appreciation.
“Looking ahead to 2015, we expect house prices to track more closely to the rate of general economic growth. That is, we see price increases in Canada’s largest cities moderating, just as our smaller city markets should see a lift,” said Soper.
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