Canadian home buyers continue to catch their breath
According to the Royal LePage House Price Survey1 and Market Survey Forecast released today, year-over-year home prices made modest gains in many regions across Canada in the third quarter of 2018. The national trend was largely influenced by price appreciation in Greater Vancouver, while property in the Greater Toronto Area experienced continued year-over-year price declines, with modest gains in value when compared to the previous quarter. Meanwhile, the Greater Montreal Area saw the highest year-over-year home price appreciation rate of the three largest Canadian metropolitan areas studied.
The Royal LePage National House Price Composite, compiled from proprietary property data in 63 of the nation's largest real estate markets, showed that the price of a home in Canada increased 2.2 per cent year-over-year to $625,499 in the third quarter of 2018. When broken out by housing type, the median price of a two-storey home rose 1.4 per cent year-over-year to $736,337, while the median price of a bungalow climbed 1.5 per cent to $519,886. Condominiums continued to see the highest rate of appreciation nationally when compared to the detached segment, rising 6.7 per cent year-over-year to $441,240.
Looking ahead, Royal LePage is projecting a further uptick in home price appreciation in the fourth quarter, forecasting a 1.5 per cent increase in the aggregate price of a home in Canada over the next three months.
"Positive economic fundamentals, supported by a new agreement on trade, should bolster consumer confidence across Canada and stoke demand in the nation's real estate market," said Phil Soper, president and CEO, Royal LePage. "Dangerously overheated regions have cooled considerably this year, while home prices have remained remarkably resilient. This is the soft landing that policy makers were hoping for."
After more than a year of intense negotiations, the federal government reached an agreement with the U.S. and Mexico on regional trade. Widely seen as a good outcome for the Canadian economy, the USMCA is expected to be signed into law before year end.
"More confident that their jobs are secure, the new USMCA agreement has removed a widespread veil of uncertainty that was acting as a drag on large purchase decisions," said Soper. "On the other hand, the trade deal paves the way for the Bank of Canada to raise interest rates. Overall, this is a positive development for housing industries on both sides of the border."