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Home prices will continue to rise across much of Canada in 2016, but not enough to match this past year’s performance as Alberta’s embattled economy and affordability issues in Toronto and Vancouver dull national price appreciation.
That is the crux of the latest Canadian housing market forecast from Royal LePage, among the country’s largest realtors, which was released today alongside its pricing survey spanning 53 large local markets.
“The frenetic pace of our country’s largest housing markets should moderate throughout the year ahead,” said Phil Soper, Royal LePage’s president and CEO, in a statement.
By the end of 2015’s fourth quarter, Royal LePage said the aggregate home price, which is based on weighted median prices of bungalows, two-storey homes, and condos, reached $500,688, a 6.5 per cent increase over the same time a year earlier. The real estate company now predicts the aggregate price of a Canadian dwelling will climb 4.1 per cent higher in 2016.
“While most of the country will continue to see house value appreciation in 2016, we expect that the pace of price increases in Greater Vancouver and the Greater Toronto Area — where real estate appreciation has significantly outpaced job and wage growth — will settle to a more sustainable, single-digit price increase trajectory,” Soper continued.
In 2015, the aggregate price of a home in the GTA shot up 8.6 per cent to $605,898, spurred by a dearth of inventory. This was especially true in the low-rise segments of the market: for two-storey homes, the median price shot up to $715,252, a 9.7 year-over-year increase, while the median price of a bungalow was $596,842, up 7.8 per cent from a year prior. Condominium units, which are in greater supply, registered a median price of $361,809 for 2015, accounting for a 3.7 per cent rise.
By the end of 2016, Royal LePage expects the aggregate home price in central Toronto to grow 5.5 per cent, shy of the 7.2 per cent increase seen in 2015 for that part of the GTA.
In the Greater Vancouver — the other market Royal LePage has pegged as being susceptible to affordability issues hampering price appreciation — the aggregate price surged to $949,468, 12.4 per cent higher than it was in 2014. The median price of a bungalow there was $1,025,604, which translates to a 16.8 per cent year-over-year increase, which led all housing categories.
Two-storey homes, however, remained most expensive last year with a median price of $1,259,289, up 12.2 per cent over 2014. Meanwhile, the median condo price was $476,213, marking a 7.2 per cent jump.
Royal LePage predicts aggregate-home-price appreciation in Vancouver, Canada’s most expensive market, will slow slightly to 9 per cent, down from the 9.4 per cent surge observed last year.
Despite the effects of lower oil prices leaking into housing markets in the Prairies, “Calgary home prices remained stable during the fourth quarter of 2015, rising 0.3 per cent year-over-year to $459,809,” said Royal LePage in notes provided with the pricing survey and forecast.
However, the realtor doesn’t expect this resilient upwards trend to persist and is calling for the aggregate price of a home in the Calgary region to drop three per cent this year.
“Through the recent period of depressed oil prices, property prices in Canada’s energy-centric regions, particularly Alberta and Newfoundland and Labrador, were more resilient than most onlookers had expected,” said Soper in the statement. “Consumers, reluctant to sell their homes at what they perceived to be a discount to their true value, simply withdrew from the market, resulting in steady house prices and a drop in unit sales volume,” he explained.
“In the coming year we expect to see the delayed impacts of the slowing economy and rising unemployment on the region’s housing stock, with moderate declines in home values.”