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Royal LePage CEO urges caution with election promises aimed at stimulating housing demand that lack concrete plans to address supply shortages

  • Housing recovery gains strength with national aggregate price forecast to rise 1.5% during the fourth quarter of 2019 compared to same period in 2018
  • Price gap between condominiums and houses shrinks as median condo price in the City of Toronto surpasses $600,000 mark
  • Montreal East posts highest home price appreciation rate in Canada’s largest urban centres, rising 8.5%
  • Lower prices in Greater Vancouver attract a new wave of home buyers, resulting in a spike in home sale volumes 

TORONTO, October 10, 2019 – According to the Royal LePage House Price Survey[1] released today, the aggregate price of a home in Canada has continued to post steady year-over-year gains during the third quarter of 2019 as the real estate market sustained its recovery from the significant downturn of 2018 and early 2019, following the introduction of the federal mortgage stress test.

“It is encouraging to see our political leaders devote thought and time to housing issues during the federal election,” said Phil Soper, president and CEO, Royal LePage. “With the fastest growing population among advanced economies worldwide, providing adequate shelter for Canada’s rapid pace of household formation presents an economic opportunity and a social challenge.

“Careful stewardship of the real estate industry and its related financial sector is critical for the health of the country’s economy and the personal wealth of Canadian families,” Soper continued. “Well-intentioned election promises aimed at making housing more accessible and affordable to first-time buyers will fall flat if they trigger a surge in demand without a corresponding increase in the supply of homes. For example, lowering monthly mortgage payments by stretching repayment over a longer time period looks great on the surface, yet a surge in new buyers could cause prices to escalate, erasing the enhanced purchasing power.”

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 median price of a home in Canada increased 1.4 per cent year-over-year to $630,335 in the third quarter of 2019. When broken out by housing type, the median price of a two-storey home rose 1.3 per cent year-over-year to $738,346, while the median price of a bungalow remained flat at $521,250. Nationally, condominiums remained the fastest appreciating housing type, with the median price rising 3.4 per cent year-over-year to $457,911. Data analyzed contains both resale and new build transactions, provided by Royal LePage’s sister company, RPS Real Property Solutions.

“Low interest rates and an outstanding employment picture continue to buoy consumer confidence and support our recovering real estate market,” said Soper. “The collateral damage from the trade war between the U.S. and China has been manageable to date. Barring a full-blown American recession, our outlook for Canada’s housing sector is for continued market expansion.”

Looking to the fourth quarter of 2019, Royal LePage forecasts that the aggregate price of a home in Canada will rise 1.5 per cent year-over-year to $632,226, which is a 0.3 per cent increase compared to the third quarter of 2019. The 2019 fourth quarter forecast is dependent on consistent economic conditions and no new housing policy changes.

Looking to regional real estate trends during the third quarter, condominiums, once affordable to most families and single professionals in the City of Toronto, have surpassed the $600,000 mark, rising to $618,391. As the price gap between condominiums and houses shrinks in the region, demand for detached properties has grown. The median price of a two-storey home in the city centre rose 5.5 per cent, signaling that buyer demand has largely absorbed the mortgage stress test hurdle to homeownership. In the fourth quarter, Royal LePage forecasts the aggregate price of a home in the Greater Toronto Area to be relatively flat quarter-over-quarter at $859,301, which is a 3.1 per cent increase over the fourth quarter of 2018.

While we predicted that the pace of home price appreciation in the Greater Montreal Area would slow down in the second half of 2019, the aggregate home price in the region remained strong, increasing 5.9 per cent year-over-year, well above the national rate. Bungalows in Montreal West posted the highest price appreciation across all housing types surveyed in the country, rising 12.2 per cent year-over-year to $447,663 while the aggregate price of home in Montreal East rose 8.5 per cent to $439,499 – the highest aggregate price increase among the largest urban centres nationwide. Significant price growth in Montreal East began to surface since the fourth quarter of 2018 as demand in the city core and lack of supply pushed buyers into the ends of the city. Overall demand in the region stems from buyers watching prices escalate and are looking for affordable properties. Another factor is strong consumer confidence as employment remains healthy and economic fundamentals remain positive. In the fourth quarter, the aggregate price of a home in the Greater Montreal Area is forecast to increase 1.6 per cent quarter-over-quarter to $425,431, which is a 6.0 per cent increase over the fourth quarter of 2018, representing the highest price increase forecast in the country.

The Greater Vancouver real estate market continues to see year-over-year price declines, which has attracted considerable interest from buyers and spurred sales. The aggregate price of home in the region decreased 5.2 per cent year-over-year to $1,194,900. However, the quarterly trend shows that the rate of price decline has slowed and is expected to slow further as buyers see current prices as an opportunity to own property in one of Canada’s most beautiful and prosperous cities. In the third quarter, the aggregate price of a home in Greater Vancouver decreased 0.8 per cent quarter-over-quarter, while the previous two quarters had quarterly decreases of 1.5 per cent (Q2 2019/Q1 2019) and 1.6 per cent (Q1 2019/Q4 2018). In the fourth quarter, the aggregate price of a home in Greater Vancouver is forecast to decrease 0.4 per cent quarter-over-quarter to $1,190,120, which is a 5.5 per cent decrease compared to the fourth quarter of 2018.

Home price appreciation in Ottawa remained at a healthy pace in the third quarter as the aggregate price of a home increased 3.7 per cent year-over-year to $481,948, a result of sustained demand from a growing technology sector. While the median price of a two-storey home and bungalow posted gains of 2.9 per cent and 8.7 per cent, respectively, the median price of a condominium dipped 0.9 per cent. The decline in the median price of a condominium reflects a lack of inventory in listings priced above entry-level. Both inventory and unit sales are expected to increase after the federal election. In the fourth quarter, the aggregate price of a home in Ottawa is forecast to increase 1.1 per cent quarter-over quarter to $487,249, which is a 3.7 per cent increase over the fourth quarter of 2018.

Commodity-driven real estate markets including CalgaryEdmontonReginaSaskatoon, and St. John’s posted year-over-year price declines. While the aggregate price of a home in Calgary decreased 4.3 per cent year-over-year to $464,542 in the third quarter, it rose 1.1 per cent over the previous quarter driven by appreciation in the two-storey detached house and bungalow segments. In the fourth quarter, the aggregate price of a home in Calgary is forecast to be flat at $465,007, which is a 2.4 per cent decrease over the fourth quarter of 2018.

In Atlantic Canada, Halifax’s low inventory and high demand have continued to put upward pressure on home prices. In the third quarter, the aggregate price of a home in the region rose 1.6 per cent year-over-year to $328,690. In the fourth quarter, the aggregate price of a home in Halifax is forecast to increase 3.7 per cent to $318,598 over the same period in 2018.

For more regional analysis, visit Royal LePage’s media room to find city-specific releases. The media room also contains royalty-free assets such as images and b-roll that are free for media use.

 

National House Price Composite in the Third Quarter of 2019 (.PDF)

Royal LePage Market Survey Forecast (.PDF)

 

About the Royal LePage House Price Survey

The Royal LePage House Price Survey provides information on the three most common types of housing in Canada, in 63 of the nation’s largest real estate markets. Housing values in the Royal LePage House Price Survey are based on the Royal LePage Canadian Real Estate Market Composite, produced quarterly through the use of company data in addition to data and analytics from its sister company, RPS Real Property Solutions, the trusted source for residential real estate intelligence and analytics in Canada. Commentary on housing and forecast values are provided by Royal LePage residential real estate experts, based on their opinions and market knowledge.

 

Can you afford a condo in Canada’s largest cities? Royal LePage reports on price per square foot

 

  • Greater Toronto Area condo price per square foot increased 9.1% year-over-year to $743
  • Greater Ottawa condo price per square foot appreciated the fastest among Canada’s largest markets, rising 17.9% year-over-year to $395
  • Condo price per square foot in the Greater Montreal Area rose double-digits year-over-year, increasing 10.3% to $362
  • Greater Vancouver Area condo price per square foot declined the most of any major market in the country year-over-year, falling 8.3% to $764
  • Greater Calgary condo price per square foot fell 6.7% year-over-year to $313

TORONTO, August 28, 2019 – According to Royal LePage, the median price per square foot of condominiums sold in the Greater Toronto Area (GTA) has risen 9.1 per cent (to $743/sq. ft.) compared to last year.[1] Meanwhile, the correction in real estate prices continued in Greater Vancouver, as the median price per square foot of a condominium fell 8.3 per cent (to $764/sq. ft.). Data analyzed contains both resale and new build transactions, which is provided by Royal LePage’s sister company, RPS Real Property Solutions.

“In Canada’s largest cities, many younger buyers searching for affordability and baby boomers looking for maintenance-free living purchase condominiums. Not surprisingly, that strong demand has pushed up price per square foot, with the exception of Vancouver and Calgary,” said Phil Soper, president and CEO, Royal LePage. “Buyers are adapting by purchasing smaller units, especially among those looking for entry-level properties.”

Examining all residential housing types (aggregate) in the greater regions, the price per square foot in Greater Ottawa had the largest year-over-year increase in the country (9.6%) followed by the Greater Montreal Area (5.9%). Price per square foot in the Greater Toronto Area rose 2.0 per cent, driven by a 6.1 per cent increase in the city of Toronto. The housing markets in Greater Vancouver and Greater Calgary posted the most significant declines with the aggregate price per square foot, decreasing 11.3 per cent and 6.2 per cent, respectively.

The price per square foot in the city of Vancouver remains the highest in the country despite a recent price correction in the region’s real estate market. Home buyers can expect to pay $1,044 per square foot for a condo and $1,279 per square foot for a single-family detached home.

Across all markets studied, with the exception of the city of Vancouver, the median price per square foot for condos is higher than single-family detached homes.

“While condo units are smaller, they are the present and future of our communities. With more development opportunities, they can meet both the growing need for housing and lifestyle expectations of homebuyers,” continued Soper.

Although the median price per square foot for a condominium is significantly higher in the city of Vancouver compared to the city of Toronto, the median price per square foot in the greater regions only favoured buyers in the Greater Toronto Area by $21 per square foot. However, condo buyers in Greater Vancouver purchased 62 more square feet than those in the GTA.

At $313 per square foot, Greater Calgary offered the lowest price point for condominiums of all markets surveyed.

“Calgary condominiums offer the best value in Canada’s major markets,” said Soper. “It is no wonder that the city vaulted to number four in The Economist’s ranking of the World’s Most Livable Cities.”[2]

REGIONAL SUMMARIES 

Greater Toronto Area

In the first seven months of the year, the median price per square foot of a condominium in the GTA experienced a substantial increase in price per square foot, rising 9.1 per cent year-over-year to $743, while the price per square foot of a single-family detached home increased a more modest 1.0 per cent year-over-year to $486.

“Low inventory levels are putting upward pressure on price per square foot in the Greater Toronto Area, especially for entry-level properties like condos. Although detached homes hold more value per square foot, condos are more affordable for first-time home buyers in the region given their smaller living space and higher supply,” said Tom Storey, sales representative, Royal LePage Signature Realty.

During the same period, the aggregate price per square foot of a home in the city of Toronto witnessed an increase of 6.1 per cent year-over-year to $782. When broken out by housing type, the median price per square foot in the single-family detached market remained relatively flat, increasing 1.5 per cent year-over-year to $747, while the median price per square foot for a condominium in the region saw a significant increase of 8.5 per cent year-over-year to $839.

“Millennials know what they want and, in some cases, are willing to pay more for less space in order to be in their desired neighbourhood. This is consistent with the trend of location being an increasingly important aspect of home ownership in today’s market,” said Storey.

In the city of Toronto, the median size of a condominium was 752 square feet, which was half the living area of the median single-family detached home (1,512/ sq. ft.). Interestingly, expanding outside of the city’s core to the Greater Toronto Area only provides a 4 per cent increase in the median condominium living area (783/ sq. ft.), compared to a 32 per cent gain in square footage for the median single-family detached home (2,000/ sq. ft.).

Greater Montreal Area

The median price per square foot for a condominium in the city of Montreal for the first seven months of 2019 climbed 7.9 per cent year-over-year to $433, while the price per square foot for a single-family detached home rose 6.9 per cent year-over-year to $313. Overall, the aggregate price per square foot of a home in the city of Montreal and Greater Montreal Area increased by 8.3 per cent and 5.9 per cent to $357 and $286, respectively.

The increase in the price per square foot of a condominium in the Greater Montreal Area was double that of a single-family detached home, rising 10.3 per cent and 5.2 per cent, respectively.

“Baby boomers looking for smaller units, millennials increasing their purchasing power, and more foreign buyers contributed to a hike in condo prices and demand in the past three years,” explained Maxime Tardif, real estate broker at Royal LePage Altitude. “Available land is limited on the island; builders and developers are making every square foot count. As a result, more high-end, spacious units are being constructed in the suburbs, particularly near transit stations.”

Although property prices remain lower outside the city core, the price per square foot appreciation rate of condominiums in the Greater Montreal Area grew faster than in Montreal proper, rising 10.3 per cent, compared to 7.9 per cent, respectively.

“The outskirts of the city are becoming attractive to many home buyers who are willing to trade shorter commute times for more square footage and better affordability,” continued Tardif. “With the transit system expansion that the REM will bring by 2021, commuting to the city core will be easier and make living outside the city centre more desirable.”

According to Tardif, areas such as Mercier, Maisonneuve (east of Viau Street), Ahuntsic, Lachine, and Lasalle offer the most attractive price-to-size ratio in the region, while neighbourhoods south of the island (including Verdun) have seen the value per square foot rise more significantly in recent years.

Of all markets studied, Montreal and the Greater Montreal Area offer the largest median condominium living space. The median size of condominiums sold in Montreal and the Greater Montreal Area in the first seven months of the year was 944 square feet and 989 square feet, respectively. For Montreal, this represents 25.5 per cent and 21.0 per cent more condo square footage than Toronto and Vancouver, respectively.

Greater Vancouver

In the first seven months of the year, the median price per square foot of a condominium in both the city of Vancouver and Greater Vancouver became more affordable, decreasing 6.3 per cent and 8.3 per cent year-over-year to $1,044 and $764 per square foot, respectively. Despite the decline , of all markets studied, the city of Vancouver still posted the highest median condominium price per square foot. Yet, with the recent divergence in their appreciation rates, the gap between the median condominium price per square foot in Greater Vancouver and the Greater Toronto Area ($764 and $743 per square foot, respectively) is closing.

“With a deceleration in Vancouver’s condo market, buyers for the first time in several years can benefit from the changing landscape. Higher inventory levels have resulted in the market nearing the point of oversupply and price per square foot has been decreasing considerably in this category,” said Adil Dinani, real estate advisor, Royal LePage West Real Estate Services. “We are also seeing a trend of buyers moving beyond the city core and closer to the transit corridor where properties are more affordable.”

While the median price per square foot of a single-family detached home in the city of Vancouver is significantly more than that of a city condo at $1,279 and $1,044 per square foot, respectively, in Greater Vancouver the median price per square foot of a condo ($764/ sq. ft.) is higher than the single-family detached home ($648/ sq. ft.).

“We predict condo buyers in the coming year will continue moving east where properties are more affordable, especially while interest rates remain low,” Dinani continued. “In addition to better affordability, many neighbourhoods in Burnaby, the Tri-Cities and the Valley are developing attractive necessities that were previously only available in Vancouver.”

The median living area of a condominium in Greater Vancouver and the city of Vancouver in the first seven months of 2019 was 845 and 780 square feet, respectively. Meanwhile, the median living area of a single-family detached home in Greater Vancouver and the city of Vancouver was 1,958 and 1,728 square feet, respectively.

Greater Calgary 

Affordability in the city of Calgary and Greater Calgary’s condominium markets continued to grow in the first seven months of the year as the median price per square foot decreased to $313 in both, representing a 6.8 per cent and 6.7 per cent drop, respectively. In contrast to other markets studied, the city of Calgary and Greater Calgary have a condominium price per square foot that is almost on par with that of  single-family detached homes, which are $310 and $302, respectively.

For the first seven months of 2019, the median living area of condominiums in the city of Calgary and Greater Calgary was 842 and 850 square feet, respectively, while the median square footage of a single-family detached home in the same areas was 1,734 and 1,769 square feet, respectively.

“The price per square foot gap of a condo and a detached home in Calgary is minimal but the condo’s smaller square footage means a more affordable price point. However, it’s not just about affordability. Condo buyers are attracted to a low maintenance lifestyle and amenities,” said Dawn Maser, realtor, Royal LePage Benchmark. “For the fourth consecutive month, condo inventory in the region declined compared to last year. It’s a good sign that the condo market may be stabilizing.”

Maser added that Seton is a neighbourhood with attractive offerings for first-time home buyers.

Greater Ottawa        

The median price per square foot of a condominium in Greater Ottawa experienced the most significant increase across all property types in all regions analyzed during the first seven months of the year, climbing by 17.9 per cent year-over-year to $395. Comparatively, the median price per square foot of a single-family detached home in Greater Ottawa over the same period rose 8.5 per cent to $265.

“Inventory levels in the Ottawa market continue to be very low for both condos and detached homes, contributing to price increases. Demand remains high and listings are selling quickly,” said Kent Browne, broker and owner, Royal LePage TEAM Realty. “We are seeing significant  interest in Ottawa’s south and west ends from residents working in the nearby military and technology hubs.”

Similar to the larger region, the city of Ottawa experienced healthy appreciation in both the condominium and single-family detached markets. During the first seven months of the year, the median price per square foot of a condominium in the region increased 4.2 per cent year-over-year to $444, while the median price per square foot of a single-family detached home increased 6.8 per cent year-over-year to $282.

The median living area of a condominium and single-family detached home in the city of Ottawa in the first seven months of 2019 was 889 and 1,942 square feet, respectively. In Greater Ottawa condominiums and single-family detached homes had a median size of 909 and 1,761 square feet, respectively.

 

Regional Price Per Square Foot Data and Living Area by Square Foot (.PDF)

 

About Royal LePage 

Serving Canadians since 1913, Royal LePage is the country’s leading provider of services to real estate brokerages, with a network of over 18,000 real estate professionals in over 600 locations nationwide. Royal LePage is the only Canadian real estate company to have its own charitable foundation, the Royal LePage Shelter Foundation, dedicated to supporting women’s and children’s shelters and educational programs aimed at ending domestic violence. Royal LePage is a Bridgemarq Real Estate Services Inc. company, a TSX-listed corporation trading under the symbol TSX:BRE. For more information, please visit www.royallepage.ca.