According to the Royal LePage House Price Survey released today, the aggregate price of a home in Canada increased 21.4 per cent year-over-year to $749,800 in the third quarter of 2021. Market activity slowed as a result of a chronic lack of inventory, a persisting challenge for housing markets from coast-to-coast, coupled with the seasonal summer slowdown.
“During the third quarter, the torrid pace of home price appreciation moderated as both demand and inventory waned, a typical summer market trend in a very atypical year. With easing pandemic restrictions, there was finally something to talk about other than real estate, and people began travelling and socializing again,” said Phil Soper, president and CEO of Royal LePage. “In addition, a year of relentless competition for too few properties drove some would-be purchasers to the sidelines as buyer fatigue set in. Yet their fundamental need or desire for a new home remains and we are seeing pent-up demand grow. We expect another unusually busy winter season building to a brisk 2022 spring market.”
The Royal LePage National House Price Composite is compiled from proprietary property data, nationally and in 62 of the nation’s largest real estate markets. When broken out by housing type, the national median price of a single-family detached home rose 25.2 per cent year-over-year to $790,000, while the median price of a condominium increased 13.0 per cent year-over-year to $533,600. Price data, which includes both resale and new build, is provided by Royal LePage’s sister company RPS Real Property Solutions, a leading Canadian real estate valuation company.
Boosting all segments of the housing market, with more immediate benefits for the condominium sector in large urban centres, immigration will continue to be a critical driver of housing demand. The Royal LePage Newcomer Survey showed that the average duration before newcomers purchase a home is three years after arrival and, nationally, 64 per cent rent their first home.
“While detached houses in suburban and smaller city communities continue to be the primary driver of Canada’s aggregate house price growth, we are seeing prices leveling in many of these regions and expect future growth to track closer to historical norms,” said Soper. “While the price gap between houses and condominiums widened during the pandemic, that too should reverse itself in the months ahead, as buyers see condo units as good value for money. In addition, the revitalization of our cities, as employees return to offices and the businesses that serve them reopen, is driving renewed interest from investors eager to provide much-needed rental accommodation.”
Royal LePage is forecasting that the aggregate price of a home in Canada will increase 16.0 per cent to $771,500 in the fourth quarter of 2021, compared to the same quarter last year. This forecast is consistent with the company’s previous update in July, 2021.
“Looking back to the late spring of 2020, the Royal LePage benchmark value of a home was $580,000. The subsequent ‘Covid-catalyst’ which drove legions of Canadians to upgrade their living situations, has created a period of exceptional home price growth with real estate values on track to grow 33 per cent by year end,” concluded Soper.
Greater Toronto Area
The aggregate price of a home in the Greater Toronto Area increased 17.9 per cent year-over-year to $1,075,900 in the third quarter of 2021. Broken out by housing type, the median price of a single-family detached home increased 24.2 per cent to $1,352,200, while the median price of a condominium increased 12.3 per cent to $645,300 during the same period.
“More than 18 months into the pandemic, and we are continuing to see strong price appreciation in the suburbs, as well as secondary cities outside of the GTA, fueled by a desire for larger homes, more outdoor space and the flexibility of location, afforded by the option of remote work,” said Karen Yolevski, chief operating officer, Royal LePage Real Estate Services Ltd. “This trend began prior to the pandemic, and has been accelerated since March, 2020. The question that remains is what percentage of those who moved away from the city centre will ultimately make their way back. Future newcomers to Canada will also be a significant factor in future demand.”
In the city of Toronto, the aggregate price of a home increased 4.8 per cent year-over-year to $1,110,500 in the third quarter of 2021. During the same period, the median price of a single-family detached home increased 11.9 per cent to $1,566,600, while the median price of a condominium increased 6.7 per cent to $687,700.
“In the city centre, prices continue to rise as supply fails to satisfy growing demand. The condo segment continues to rebound, following a drop in sales and prices early in the pandemic. As immigration levels increase, so too will demand for condominiums in major urban centres like Toronto, which will put more pressure on prices in the coming year.”
Yolevski added that while activity cooled slightly in the third quarter, and fewer listings received multiple offers, a chronic shortage of inventory will continue to create a competitive environment for buyers.
“In some cases, would-be sellers are not putting their homes on the market for fear they will not find another property to buy,” said Yolevski. “I expect, even as the rate of appreciation slows, prices will continue to climb through the remainder of the year and into 2022, when unmet demand from this year returns to the market.”
Royal LePage is forecasting that the aggregate price of a home in the Greater Toronto Area will increase 14.5 per cent in the fourth quarter of 2021, compared to the same quarter last year. This forecast is consistent with the company’s previous update in July, 2021.
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