First-time homebuyers may catch a break in certain Ontario markets
Attention would-be homebuyers in the Greater Golden Horseshoe: Recent home price trends indicate the recovery is on, but there are still some opportunities for first-time buyers in certain areas.
According to the latest Royal LePage House Price Survey and Market Survey Forecast, 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.
The Royal LePage National House Price Composite shows 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 projects 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,” says 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.”
“I am concerned that the slower market will cause housing supply issues to be shuffled aside for other priorities,” Soper adds. “The return of runaway home prices in the country’s largest markets remains a real threat. Not this year, but in the near future. Job growth is strong, Canada is attracting more of the best and brightest from around the world and the large millennial cohort is putting increasing pressure on our limited new housing stock. It is imperative that all levels of government address looming supply shortages, particularly in affordable housing.”
After a number of years where Canada’s major real estate markets were tilted decidedly in favour of home sellers, 2018 has provided relief for many purchasers, particularly first-time buyers. “The desire to own a home remains strong with younger families,” says Soper. “Single-digit price appreciation makes pursuing the dream of home ownership a realistic proposition for many.”
During the third quarter, Ontario continued to see noticeable differences between appreciation rates in the GTA and surrounding Golden Horseshoe cities and beyond. Despite some price relief in the GTA, buyers – particularly young families – from the region are venturing out to other Southern Ontario cities in search of more affordable homes, where price points are still significantly lower.
In contrast, over the same period, the aggregate price of a home in the GTA remained relatively flat year-over-year, depreciating 0.4 per cent to $836,402. The City of Toronto maintained solid ground, increasing by a healthy 5.2 per cent, while nearly every suburban region studied, except for Mississauga, posted year-over-year price declines. However, quarter-over-quarter, the aggregate price of a home in the GTA rose 1.3 per cent. By the end of the fourth quarter, Royal LePage expects the aggregate price of a home in the GTA to rise to $853,097, a further 2.0 per cent over the third quarter of 2018.
“The GTA is emerging from a housing correction that was triggered by a combination of eroding affordability and government intervention,” says Soper. “The introduction of the mortgage stress test in particular slowed activity in Toronto’s ‘905,’ bringing lower prices to the over-heated suburban region. Quarter-over-quarter trends are pointing to the end of this correctional cycle and the beginning of a modest recovery in the region.”
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