Home prices in Toronto are higher than in Vancouver, the forecast says

Content of the article

Toronto will steal Vancouver's title as Canada's most expensive housing market by the end of the year, a new forecast from Royal LePage predicts.

Content of the article

After better-than-expected sales and price growth in the first quarter of this year, the real estate company has raised its forecast for home prices in markets across the country.

According to the Royal LePage House Price Survey, which collects data from Canada's 63 largest housing markets, aggregate home prices rose 4.3 percent year over year to $812,100 in the first quarter of 2024.

Content of the article

“Consistent with our previous forecast, the market reached a critical tipping point in the first quarter of 2024 when home prices began to decline and begin to rise again,” said Phil Soper, president and CEO of Royal LePage.

“It is clear that more and more buyers are being driven by the need to resist rising house prices rather than adopting a strategy of waiting for mortgage rates to fall.”

Royal LePage's first three months of the year saw price gains and sales activity in Canada's housing market, a trend it expects to accelerate only when the Bank of Canada cuts interest rates for the first time later this year.

According to their updated forecast, nationwide home prices will increase by 9 percent annually through the fourth quarter of 2024.

But some areas will be better than others.

Prices in the Greater Toronto Area are expected to rise 10 per cent in the fourth quarter, after rising 5.2 per cent to $1,177,700 in the first quarter, higher than all major markets in the country.

“At the end of 2023, we are forecasting modest price increases in the first half of this year and strong growth in the third quarter, followed by one or more expected rate cuts. So far, what we've seen is higher-than-expected sales volume and price growth,” said Karen Jolewski, chief operating officer of Royal LePage Real Estate Services Ltd, of the Toronto market.

Content of the article

Content of the article

“Average days on market have been steadily decreasing since the beginning of the year, and we're starting to see an increase in new listings that we desperately need.”

Montreal is expected to be another top flight, with prices rising 8.5 percent in the fourth quarter, the second highest in Canada.

However, activity in the Greater Vancouver area was somewhat subdued, with prices up 3.4 per cent in the first quarter to $1,238,200, Royal LePage said.

“Heading into spring, the Vancouver market is steadily gaining momentum, although not at the feverish pace that other markets in Canada have seen recently,” said Randy Ryalls, general manager of Royal LePage Sterling Realty.

“The mild uptick in activity we experienced in the first few months of the year is expected to continue in the coming months, which could lead to moderate house price growth,” he said.

Royal LePage predicts Vancouver home prices will rise 5.5 percent in the fourth quarter.

“While Vancouver remains the nation's most expensive market today, Royal LePage predicts that aggregate home prices in the GTA will overtake Greater Vancouver in the second half of 2024,” the report said.

Content of the article

Toronto and Montreal's gains are expected to surpass those of Calgary, which Royal LePage previously expected to see the biggest gains this year.

The Alberta city, which bucked a downward price trend last year, saw aggregate home prices rise 9.7 per cent to $676,400 in the first quarter, the largest increase in the country.

“While activity levels in Alberta remain strong and prices continue to rise, our research shows that buyer demand for available inventory is strongest in the country's two largest urban centers,” said Soper. “We currently expect Toronto and Montreal to have the highest home price growth this year.”

Calgary home prices are expected to increase by 8 per cent in the fourth quarter.

Nearly 90 percent of the areas tracked by Royal LePage posted higher prices at the start of the year, but housing markets have yet to fully recover from the post-pandemic correction, the report said.

Canadian aggregate home prices are still 5.2 percent below their peak in the first quarter of 2022. That is, prices remain much higher than pre-pandemic levels.

Content of the article

In the first quarter of this year, house prices were 30 percent higher than in 2019, the report said.

Sign up here to get Posthaste delivered straight to your inbox.

Good news about renting. Annual increases in Canadian rents slowed in March, with average rents falling 0.6 percent from the previous month, according to Urbanation's monthly report.

The decline was due in part to seasonal forces, but also to renters moving out of really expensive cities like Vancouver and Toronto, Rentals.ca reported.

Rents averaged $2,181 in March, up 8.8 percent from a year earlier, a cooler pace than the 10.5 percent increase recorded in February.

Average rents in Canada have increased by 21 percent since March 2020, the month the global COVID-19 pandemic began.

Content of the article

Content of the article

McLister on Mortgages

Want to learn more about mortgages? Mortgage strategist Robert McAllister's Financial Post helps you navigate the complex sector, from the latest trends to financing opportunities you don't want to miss. Read them here

Today's Posthaste was written by Pamela Haven with additional reporting from the Financial Post, The Canadian Press and Bloomberg.

Have a story idea, pitch, embargo report or suggestion for this newsletter? Email us at [email protected].

Bookmark our website and support journalism: Don't miss the business news you need to know — bookmark Financialpost.com and subscribe to our newsletters here.

Content of the article