Royal LePage sees further price increases ahead especially in second half of the year
Canadian homeowners and investors in residential real estate should see a more normal Canadian housing market by the end of 2024.
Nationwide real estate brokerage Royal LePage has released its latest Market Survey Forecast which expects continued growth for home prices with the aggregate reaching $843,684 in the fourth quarter of next year, a rise of 5.5% year over year. The median price of a single-family detached property and condominium are projected to increase 6% and 5% to $879,164 and $616,140, respectively.
"Looking ahead, we see 2024 as an important tipping point for the national economy as the majority of Canadians acknowledge that the ultra-low interest rate era is dead and gone," said Phil Soper, president and CEO, Royal LePage. "We believe that the 'great adjustment' to tolerable, mid-single-digit borrowing costs will have a firm grip on our collective consciousness after only modest rate cuts by the Bank of Canada."
The price increases will be seen in all major markets, led by Calgary which has bucked the trend this year with prices rising where other urban centres have seen decline.
Rate acceptance
However, the report assumes that the Bank of Canada will hold interest rates at 5% throughout the first half of 2024, which although higher than in recent years, should give would-be homebuyers some sense of stability.
"For the last year, many Canadians have been fixated on the idea of interest rates needing to come down significantly before they can afford to enter or re-enter the housing market,” added Soper. “Acceptance that a mortgage rate of 4-5% is the new normal should untether pent-up demand as first-time buyers, flush with savings collected during the extended down market in housing, regain the confidence to go home shopping. And, with the return of first-timer demand, we expect families who have put off upgrading their homes to begin to list their properties in much greater numbers.”
Nationally, home prices are forecast to see modest quarterly gains in the first two quarters of 2024, with more considerable increases expected in the second half of the year, following the anticipated start of interest rate cuts by the Bank of Canada.
