Royal LePage says softer activity means prices will grow by slightly less in Q4
The impact of higher rates and the cost of living weakened Canadian housing market activity in the third quarter of 2023, and expectation of rising prices has been slightly moderated through to the end of the year.
Royal LePage has cut its fourth quarter national house price forecast to 7% year-over-year from a previous 8.5% due to softer activity in the market. While the national aggregate home price increased 3.6% year over year in Q3 2023, it decreased 0.8% on a quarter-over-quarter basis.
Aggregate home prices in greater regions of Toronto and Vancouver posted modest quarterly declines in Q3 of 2.8% and 1.8%, respectively, while the Greater Montreal Area posted a 0.6% aggregate price increase quarter over quarter.
However, Phil Soper, president and CEO of Royal LePage, does not see a significant downturn in home values.
"With activity slowing, home prices softened in some of our major markets over the last three months, following a stronger-than-expected second quarter. Prices remain up on a year-over-year basis, with today's stable market standing in sharp contrast to the steep declines experienced in the third quarter of 2022," he said "While trading volumes in most regions remain sluggish, Canada's housing market is on solid footing, with pent-up demand building. We don't anticipate a material change in property prices through the remainder of the year."
The national median price of a single-family detached home increased 3.4% year-over-year to $833,600, while the median price of a condominium increased 3.8% year-over-year to $587,400.
Upward pressure ahead
Soper said that as interest rates ease, the national real estate brokerage firm is expecting a surge in buyers returning to the market.
But with immigration strong, the weakness in the housing supply chain will be exacerbated as household growth outpaces new home construction.
“The housing challenge is complex,” he said. “A large number of young Canadians are looking to purchase or rent their first home, the number of people per new household is smaller than a generation ago, and baby boomers are living to a greater age and choosing to stay in their homes longer. Retirements are growing and there aren't enough young people to take over, so we need to welcome immigrants at a record rate. New Canadians need housing too, of course.”
