People have been calling Canadian real estate’s upward trajectory “unsustainable” for almost a decade now. But if a global pandemic, followed by a recession, followed by more pandemic hasn’t been enough to cool the market, it’s fair to wonder when conditions will change enough to give homebuyers some hope in the face of dwindling inventory and high prices.
The market will experience its share of changes next year, but Canada’s severe case of real estate fever, and the country’s ongoing shortage of homes for sale, isn’t likely to be broken by any of them.
Canadian home prices are expected to rise by 10.5% in 2022, with Toronto, Vancouver and Halifax projected to see the largest increases. According to the new survey from real estate firm Royal LePage, next year’s forecast follows a record-breaking year in 2021, when housing prices jumped by 21.4%.
“While some believe that housing is now overvalued, signals point to a level of demand that will continue to outpace inventory, keeping prices rising on a steep upward trajectory,” Royal LePage president and CEO Phil Soper said in a statement. “That said, I do expect to see price appreciation ease from the unhealthy levels that we have been grappling with over the last 18 months.”
The 2022 Royal LePage Market Survey Forecast predicts the aggregate price of a home in Canada will increase by 10.5% to $859,700 by late 2022. Aggregate price refers to the “weighted average of the median values” of single-family homes and condominiums in a given area. Royal LePage also anticipates the median price of a single-family detached home in Canada to climb by 11% to $918,000 in 2022, while condominium prices are projected to grow by eight% to $594,000.
In a market characterized by low supply, Soper said the increases will be driven by eager buyers who were unable to secure homes in 2021, rising immigration, as well as low interest rates and a continued emphasis on remote work as COVID-19 variants stifle Canada’s reopening plans, causing people to save more money as travel and entertainment options diminish.
“All of these economic variables have been shown to stimulate housing activity,” Soper explained. “Many of those looking to purchase a home, whether their first, an upgrade, or a recreational property, stand able to take advantage of increased savings and record-low interest rates.”
The biggest increases are expected in the Toronto and Vancouver areas, with the aggregate price of homes rising by 11 and 10.5%. They’re followed closely by Halifax at 10%, which Royal LePage says is driven by out-of-province demand, largely from Ontario.
The smallest increase is expected in Edmonton at five%, followed closely by Calgary, Regina and Winnipeg at six% each.
In Canada, aggregate price predictions show homes will be the most expensive in Greater Vancouver ($1,375,700), Greater Toronto ($1,256,500), and Ottawa ($806,600), while the lowest prices are expected to be found in Winnipeg ($372,100), Regina ($376,300) and Edmonton ($429,000).
Following a pandemic-related downturn, the survey also showed condo demand picking up in 2022 in cities like Montreal and Toronto.
The price appreciation gap between condominiums and detached properties is narrowing. This trend will continue in 2022, as entry-level buyers are priced out of more expensive property segments, and the revival of the downtown core continues.