Forecast 2019 – where are Canada’s hottest housing markets?
Wondering where Canada’s hottest housing markets are, as 2018 comes to a close and 2019 is just around the corner? Well, that all depends on who you ask.
Two of Canada’s large realty firms – Royal LePage and ReMax – both issued their 2019 housing market outlooks on Dec. 11.
Yes, the very same day.
Rather than produce two stories on the exact same topic, just from different sources, we thought it would be interesting to compare them. And while there are some commonalities in their forecasts, there are also some interesting discrepancies.
There is no ‘Canadian’ market
Let’s begin with the headline of ReMax’s 2019 Housing Market Outlook: “Canadian home prices expected to increase by 1.7 per cent in 2019.”
Yeah, about that. Forget that headline. As we recently wrote, those national numbers are pretty meaningless. It’s like trying to summarize the weather, temperature or traffic as “Canadian.”
But, just for comparison purposes, ReMax estimates Canadian home prices will grow 1.7 per cent in 2019; Royal LePage, 1.2 per cent.
National numbers that do matter are interest rates, GDP growth and employment. Then there’s immigration, which affects some markets more than others, mortgage regulations and housing supply. All of these factors are the key drivers of real estate. But more on that later.
Now let’s take a look at some of the regional highlights.
- Toronto average prices down 4% in 2018 to $789,181
- Toronto average prices forecast to rise 2% in 2019 to $804,964
In Toronto, rising interest rates and the mortgage stress test were the two major factors affecting market activity in 2018, with average sale prices dropping by four per cent from $822,572 in 2017 to $789,181 in 2018, and unit sales down by 16 per cent. Lack of affordability in the single-detached segment will make it difficult for buyers wanting to enter this market. Resale condos, on the other hand, now represent almost 37 per cent of total sales, fueled by affordability.
ReMax Housing Market Outlook, select major markets
Average Home Price
Average Home Price
Elsewhere in Ontario
Rising interest rates and the stress test continue to make it difficult for prospective buyers in Barrie, Oakville and Durham regions.
“This is particularly true for first-time buyers and single Millennials, as evident in cities like Brampton, Kingston and Durham,” says Christopher Alexander, executive vice-president and regional director, ReMax of Ontario-Atlantic Canada.
Hottest in the province
The hottest market in Ontario? Windsor, which showed price growth of 13 per cent in 2018, to $299,750, with another 10 per cent increase forecast for 2019. London is also expected to be strong, with prices to increase another five per cent next year, after rising 17 per cent this year to reach $379,654.
Royal LePage says:
- GTA average price in 2018 $844,000
- GTA average price forecast to rise 1.3% to $854,552
“Compared to the record pace of home appreciation seen in 2016 and 2017, the GTA housing market is now positioned for much healthier and sustainable growth in future years,” says Chris Slightham, broker and owner, Royal LePage Signature Realty.
Many regions outside of Toronto’s core saw price declines in 2018, a result of overshooting in previous years. The continued population growth should cause the suburbs to stabilize and reignite price growth. In addition, the potential subway expansion into the suburbs should stabilize and increase home prices in close proximity to new transit infrastructure.
Elsewhere in Ontario
The median price in Ottawa is expected to increase 2.5 per cent in 2019 to $487,910, benefitting from the city’s healthy economy and high income per household, driven by the public and technology sectors.
Interestingly, Royal LePage also notes that neither the new mortgage rules nor recent interest rate hikes have notably affected Ottawa’s housing market.
Highlights from other Canadian markets
The star performer of all major Canadian markets in 2019? Montreal, according to Royal LePage.
“Quebec will out-perform the nation in 2019,” says President and CEO Phil Soper. “Like other regions of the country, the economy is strong and people are working. What is different is affordability. We have to remember that Montreal sat out the rapid home price inflation we saw in Vancouver and Toronto this decade, and in Calgary the decade before.”
As for the ReMax outlook for Montreal, Quebec did not participate in this year’s forecast.
Royal LePage Market Survey Forecast
2018 Aggregate Home Price
Home Price (Forecast)
|Greater Toronto Area||$844,000||$854,552||1.3%|
|Greater Montreal Area||$409,000||$421,306||3.0%|
Now for more on those national factors that do influence real estate.
“I would call attention to two factors influencing our forecast that deserve special consideration,” says Soper. “Firstly, home prices are appreciating, albeit at a snail’s pace. Secondly, the Canadian market is supported by strong economic fundamentals, including a robust rate of new household formation and excellent employment growth.
“The future for Canadian housing remains bright, perhaps too bright. With an increasing number of gainfully employed people looking to put a roof over their heads, and the scarce availability of rental accommodation, policy makers in our major markets will once again be struggling with housing shortages. More than an affordable housing problem, we will once again be facing an overall housing supply crisis.”
As for interest rates, the Bank of Canada held its benchmark interest rate of 1.75 per cent on Dec. 5, citing a weaker than expected energy sector. Further rate increases are expected in 2019, making it more difficult for Canadians to buy a home in 2019.
The Bank forecasts GDP will increase 2.1 per cent in 2019, a modest increase over 2018, while Canada’s unemployment rate fell to 5.6 per cent in November, the lowest on record since 1976.