• Aggregate price of a home in the Greater Toronto Area forecast to rise 5.75%
• Tech and government sector expansion to drive Ottawa prices up 11.5%
• Canada’s priciest city to experience 9.0% rise as housing demand in Vancouver surges
• Halifax and Greater Montreal prices forecast to rise 7.5% and 6.0%, respectively
• Calgary, Edmonton prices buck regional economic drag, to show modest price growth

TORONTO, ON, December 14, 2020 – Housing demand exceeded expectations in the second half of 2020. The supply of homes available for sale failed to keep pace, driving home prices higher and pushing unmet buyer demand into the new year. According to the Royal LePage Market Survey Forecast, the aggregate[1] price of a home in Canada is set to rise 5.5 per cent year-over-year to $746,100 in 2021, with the median price of a two-storey detached house and condominium projected to increase 6.0 per cent and 2.25 per cent to $890,100 and $522,700, respectively.[2]

“The leading indicators we analyze are pointing to a market that favours property sellers in the all-important spring of 2021,” said Phil Soper, president and CEO, Royal LePage. “Across the country, a large number of hopeful buyers intent on improving their housing situation were not able to find the home they were looking for this year, as the inventory of properties for sale came nowhere near to meeting surging demand. With policy makers all but promising record low, industry supportive interest rates to continue, we do not see this imbalance improving in the new year. The upward pressure on home prices will continue.

“There was a clear shift towards larger properties and single-family dwellings in 2020, as families repurposed homes to become their office, school classroom, gymnasium and restaurant during the pandemic,” Soper continued. “We expect this trend to moderate as life returns to normal in the months ahead. It is also worth noting, that Canada welcomed a new generation of first-time homeowners this year, encouraged by lower financing costs and softer demand for city centre condominiums. Urban living remains attractive for many.”

The value of single-family houses and homes outside of major urban markets are forecast to continue to outpace city core condominiums in the year ahead, driven both by Canadians seeking larger homes in a time where remote work has become more commonplace, and broad-based demographic trends, including baby-boomer retirement.

“Mega-trends that predate the pandemic are pushing home prices higher in secondary markets outside of our largest cities. Corporate Canada’s pandemic-driven move to work-from-home operations has simply accelerated relocation patterns already underway,” said Soper. “The huge baby-boomer demographic began post-children migration to suburban and recreational-style communities in the middle of the last decade, and material numbers of the equally populous millennial generation have been exiting city centre condos in search of space as they began families.”

Soper added that the trend of high demand outside of urban centres will slowly ease as listings in city centres become more competitive against growing prices in suburban and exurban markets.

Immigration is critical to the housing market both indirectly, as it is supportive of economic growth, as well as directly through housing demand. In October, the federal government announced its plan to add more than 1.2 million immigrants over three years, a significant jump from previous years. Previously published Royal LePage research[3] into this demographic shows that newcomers to Canada typically rent for three years before purchasing, after which they have a material impact on new household formation and overall housing demand. An increase in immigration is supportive of both the resale market and investment demand for rental condominiums.

Nationally, the condominium segment is expected to see healthy demand in most of Canada’s largest cities. A notable exception is the Greater Toronto Area where a softer condominium market began emerging in the second half of 2020. Within the region, modest price gains for larger units outside of the city centre is expected to continue to offset softer demand in the downtown core. With the return of international university student rental demand and newly arrived immigrants in the second half of 2021, demand for centrally located units should increase.

The concern regarding the impact of potential mortgage defaults related to mortgage deferrals during the summer has eased significantly, as many Canadians who deferred payments have begun repayment. According to CMHC, as of September 30, 2020, the organization’s entire insured book of business has 5 per cent of loans with a payment deferral in place; a decline from approximately 8 per cent in August.[4]

“The first half of 2021 will be something of an economic and social tug-o-war between advancing medical science and surging housing demand,” concluded Soper. “The real estate brokerage industry has developed protocols that allow us to safely sell property during the pandemic, yet some would-be sellers will remain cautious and not list their properties while high levels of COVID-19 transmission remain the norm, restricting available housing supply.”

Royal LePage 2021 Market Survey Forecast Price Table:

rlp.ca/rlp2021_forecast_table 

MARKET SUMMARIES 

Greater Toronto Area

In the Greater Toronto Area, the aggregate price of a home in 2021 is forecast to increase 5.75 per cent year-over-year to $990,300. During the same period, the median price of a standard two-storey home is expected to rise 7.5 per cent to $1,185,800, while the median price of a condominium is forecast to increase 0.5 per cent to $600,800. The relatively flat median price projection for the condominium segment reflects a modest increase in median price for condominiums in the 905 area, offsetting a slight dip in median price for the City of Toronto.

“Single family homes remain in high demand. We expect lighter activity as we near the winter holidays but if inventory does not improve in early 2021, we could have another year of strong price appreciation,” said Debra Harris, vice president, Royal LePage Real Estate Services Ltd. “Low inventory is expected to put upward pressure on prices but we could see low unit sales if there isn’t product to sell.”

Performance within the condominium segment is expected to remain varied with higher demand for larger units in the 905 area. Harris added that while there has been a recent surge in condominium listings, the historically starved Toronto condo market can withstand an increase in condo supply without significantly impacting price in the short term. With the federal government’s new and aggressive immigration targets as well as the expected return of rental demand from university students in the fall, resale demand for condominiums should be significantly higher in the second half of the year.

“Many young people returned home to save money during the pandemic and we expect them to want to get back into city life when the vaccine becomes available. The question is whether consumer confidence in the condo market will be healthy given the surge in listings. The reality is that current inventory is much healthier than where we were last year,” said Harris. “For the many young professionals who were discouraged by strong competition in the condo market in previous years, this window may be their opportunity to find a home they can get excited about living in.”

Greater Montreal Area 

In the Greater Montreal Area, the aggregate price of a home in 2021 is forecast to increase 6.0 per cent year-over-year to $514,900. During the same period, the median price of a standard two-storey home is expected to rise 7.0 per cent to $656,200, while the median price of a condominium is forecast to increase 3.75 per cent to $382,600.

“The pandemic has sparked our imagination in the sense that it’s given people the opportunity to take on real estate projects that would have been impossible without the option of remote work,” said Dominic St-Pierre, vice-president and general manager, Royal LePage Quebec. “Buying a property became the main objective of many households, and for some, the only way to get some fresh air during the pandemic. We expect demand will only ease when Canadians truly come out of lockdown, that is to say when travel and regular activities can resume.”

St-Pierre added that Montreal’s real estate market has proven to be surprisingly resilient in the face of 2020’s economic uncertainty and the effects of the global pandemic on urban lifestyle.

Despite the exodus of Montrealers to the suburbs over the course of the last several months, demand on the island for single-family homes, and some condominiums, has reached new heights. Well-priced properties are selling quickly, due to a lack of inventory and accumulated demand prompted by health and safety restrictions.

“In advance of upcoming mass distribution of the vaccine and a return to normal business activity, it is possible that prolonged safety restrictions and their impact on the precarious job market, could lead to an increase in mortgage defaults, which would inject inventory into the real estate market,” suggested St-Pierre. “However, pent-up demand has been so high in the Greater Montreal Area that such a boost in inventory would be insufficient to cool the market, as properties would be absorbed immediately.”

In 2021, Greater Montreal’s condominium market will vary from one neighbourhood to the next.

“Generally speaking, the number of condos for sale should continue to increase, especially in the downtown core, where prices could stabilize or even dip slightly in some cases, attracting first-time homebuyers who can take advantage of record low interest rates,” predicts St-Pierre. “Elsewhere in the region, condo prices could increase. One of the driving factors in condo demand will be the return of foreign students to the city centre, providing improved revenue for landlords who have seen rental prices shrink.”

Greater Vancouver 

In Greater Vancouver, the aggregate price of a home in 2021 is forecast to increase 9.0 per cent year-over-year to $1,262,600. During the same period, the median price of a standard two-storey home is expected to rise 10.0 per cent to $1,671,700, while the median price of a condominium is forecast to increase 3.5 per cent to $684,300.

“I am confident we will continue to see prices rise next year. Vancouver has proven to be a rather resilient market, with high demand and quite low inventory,” said Randy Ryalls, managing broker, Royal LePage Sterling Realty. “In March, we couldn’t have imagined this is where we’d be today, but despite public health concerns, consumer confidence remains high. With very attractive mortgage rates and the promise of a vaccine on the horizon, demand is likely to remain strong.”

Ryalls noted that the current market conditions create a tough situation for buyers, who are oftentimes competing for properties; something he expects is likely to continue through 2021.

“We are seeing multiple offers on almost every reasonably-priced detached listing. There simply isn’t enough inventory to meet the demand,” said Ryalls. “A balanced Vancouver market has about 15,000 active listings available. Right now, we’re sitting at roughly 10,000. If we reach the end of January without an injection of inventory, we will continue to see upward pressure on prices in the spring. I expect a strong seller’s market in 2021.”

Ryalls added that while the condominium market is not as strained as the single-family detached sector, demand remains strong.

Ottawa 

In Ottawa, the aggregate price of a home in 2021 is forecast to increase 11.5 per cent year-over-year to $624,000. During the same period, the median price of a condominium is expected to increase 7.5 per cent to $417,900, while the median price for a two-storey detached home is forecast to rise 12.0 per cent to $656,300.

“Ottawa real estate continues to see high demand from Toronto buyers who are looking for less density and more outdoor spaces. Living in Ottawa gives you access to great schools and healthcare, a good job market and you can maintain a city lifestyle while affording a much larger home than what is offered in the GTA,” said Jason Ralph, managing partner, Royal LePage TEAM Realty. “Many local buyers struggled to find what they were looking for in 2020 due to low inventory. With their return to the market in the spring coupled with continued demand from the GTA, prices are forecast to rise significantly.”

Ralph added that while inventory is critical to a healthy spring market, demand is expected to continue to outpace supply.

“Ottawa has very low inventory across all housing types, and the single-family home market is especially competitive,” said Ralph. “We do not see inventory relief coming in the spring, which is expected to result in multiple offers and further price increases. However, despite price gains, Ottawa remains very affordable compared to capital cities internationally, as well as large urban centres in Canada.”

Calgary 

In Calgary, the aggregate price of a home in 2021 is forecast to increase 0.75 per cent to $469,600 year-over-year. During the same period, the median price of a condominium is forecast to decrease 1.0 per cent to $258,000, while the median price of a two-storey detached home is forecast to rise 1.5 per cent to $514,800. “Inventory for detached homes has not seen similar lows since 2001. Buyers are eager to get into the market, but they may have to broaden their search to find a good selection to choose from if they are looking for detached homes in popular neighbourhoods,” said Corinne Lyall, broker and owner, Royal LePage Benchmark. “While spring is expected to bring new inventory to the market, we are also anticipating a healthy level of demand from buyers, resulting in a balanced market.” As a result of low interest rates, Lyall added that buyer demand has stabilized and the downturn in the oil market is promoting a more diversified economy. The federal government’s recent increase in immigration targets may spur the condo market, providing more price stability and a potential opportunity for price gains. The condominium market is expected to dip modestly in median price, however, high demand from entry-level buyers and single professionals will continue to absorb some oversupply.

Edmonton 

In Edmonton, the aggregate price of a home in 2021 is forecast to increase 1.5 per cent year-over-year to $375,600. During the same period, the median price of a two-storey detached home is forecast to increase 1.5 per cent to $430,700, while the median price of a condominium is expected to rise 1.0 per cent to $215,100. “In the second half of 2020, demand has outpaced supply and inventory is currently the lowest it’s been in five years. Some single-family homes are even attracting multiple offers and I expect to see the buyers who didn’t transact this fall, return in the spring. The question is whether the inventory will be there,” said Tom Shearer, broker and owner, Royal LePage Noralta Real Estate. “In 2020, many sellers took their homes off the market due to their concerns regarding COVID-19. If we find ourselves again with a limited supply of houses on the market, prices will move upward.” Shearer added the challenges that the Edmonton real estate market has faced in recent years have been absorbed into current pricing as sellers have now made their listings more competitive. “There is excellent value in Edmonton,” added Shearer. “Homeownership is possible for most professionals, and young families can find detached properties in desirable neighbourhoods.”

Halifax 

In Halifax, the aggregate price of a home in 2021 is forecast to increase 7.5 per cent year-over-year to $400,700. During the same period, the median price of a two-storey detached home is forecast to rise 9.0 per cent to $435,300, while the median price of a condominium is forecast to increase 7.0 per cent to $322,300.

“The number of listings in Halifax is the lowest it has been in 16 years and demand is still strong. As remote work becomes more permanent, buyers are moving back to the Maritimes,” said Matt Honsberger, broker and owner, Royal LePage Atlantic. “Halifax will continue to be in high demand as buyers from outside of Atlantic Canada seek affordability and the Maritime lifestyle while easily accessing the best of the city. You can live on the outskirts of Halifax and be downtown in 15 minutes. It’s the best of both worlds.”

Honsberger says while current demand for condominiums is lower than detached homes, there are signals that demand for condos may increase in 2021. “While international students make up a smaller percentage of condo renters and buyers than other Maritime cities, a return to pre-COVID demand will stimulate the condominium market as students are expected to return in autumn 2021,” said Honsberger. “The timing of new build projects has also been pushed out, which could dampen supply in the new year.”

Winnipeg 

In Winnipeg, the aggregate price of a home in 2021 is forecast to increase 4.75 per cent year-over-year to $348,700. During the same period, the median price of a two-storey detached home is expected to rise 5.0 per cent to $401,600, while the median price of a condominium is forecast to increase 1.25 per cent to $230,100. “Approximately 95% of listings that were added to the market in November, sold. That’s unheard of in Winnipeg,” said Michael Froese, broker and manager, Royal LePage Prime Real Estate.

“Even with the increased COVID-19 restrictions, demand remains strong. Heading into the new year, there would have to be a significant rise in our seasonal supply of listings to meet it.” Froese added that strong demand for homes in the outlying communities is expected to remain a trend in 2021, as companies and individuals continue to normalize remote work and buyers look for homes that fit their new needs. Homes and communities that offer these types of amenities are thriving as buyers seek as much space as possible for their dollar.

Regina 

In Regina, the aggregate price of a home in 2021 is forecast to increase 2.75 per cent year-over-year to $335,600. During the same period, the median price of a two-storey detached home is forecast to increase 3.0 per cent to $417,400, while the median price of a condominium is forecast to increase 1.5 per cent to $226,000. “Low inventory continues to result in multiple offer scenarios as buyers seek larger homes. Consumer confidence is healthy and if we see a significant lift in inventory in the new year, we should have a brisk spring market” said Mike Duggleby, broker and owner, Royal LePage Regina Realty.

“There is a high degree of uncertainty, but if current trends continue into 2021, there will be upward pressure on prices.” Duggleby added that condominiums, after years of oversupply, are proving to be popular with investors who see current prices as below their value. “Condominium investors have two streams of demand – university students and young immigrant families. If the Canadian government hits its newly revised immigration target and university students return in the fall, demand for condominiums will increase.”

Royal LePage 2021 Market Survey Forecast Price Table: 

rlp.ca/rlp2021_forecast_table 

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About the Royal LePage Market Survey Forecast 

The Royal LePage Market Survey Forecast provides year-over-year price expectations for Canada’s nine largest markets. Housing values are based on the Royal LePage National House Price Composite, produced 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 trend analysis and market knowledge.

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. 

For further information, please contact:

Katie Raskina
Proof Strategies
[email protected]
416 969-2709 

1] Royal LePage’s aggregate home price is based on a weighted model using median prices and includes all housing types.
[2] Price data, which includes both resale and new build, is provided by Royal LePage’s sister company RPS Real Property Solutions, a leading Canadian valuation company. Price forecast reflects Q4 2021 over Q4 2020 projections.
[3] Royal LePage Canada, October 2019: One in five homes purchased by Canadian newcomers
[4] CMHC, 2020 third quarter results:

https://www.cmhc-schl.gc.ca/en/media-newsroom/news-releases/2020/cmhc-releases-results-third-quarter-2020
 

New OSFI Stress Test Set to Limit National Home Price Appreciation to 4.9% in 2018

•  Impact of new stress test expected to be contained to first half of 2018 for most major markets
• Still risk of high price appreciation in Greater Toronto Area and Greater Vancouver as chance of market correction fades
• Compounding policies could have unintended consequences for struggling housing markets

TORONTO, December 13, 2017 – According to the Royal LePage Market Survey Forecast released today, the Royal LePage House Price Composite, which measures home prices in 53 key Canadian cities, is expected to increase 4.9 per cent by the end of 2018 to $661,919, in the face of a series of measures aimed at affordability challenges in Greater Vancouver and the Greater Toronto Area.

One of the most significant regulatory interventions in the housing industry in years is the incoming Office of the Superintendent of Financial Institutions (OSFI) mortgage financing stress test, which will take effect on January 1, 2018. The stress test targets existing and prospective homeowners applying for a mortgage, requiring them to meet stricter criteria when seeking new financing.

With a large number of existing homeowners potentially failing the test when refinancing next year, a temporary reduction in consumer confidence may further stagnate price growth as potential buyers and sellers take a ‘wait and see’ approach. Moreover, some potential move-up buyers will likely delay listing their homes as they will not be able to access sufficient financing for their desired next purchase. With further diminished affordability, it is likely that demand for entry-level properties will surge. In most urban centres, this will be most evident in the condominium segment.

“It is prudent that policy makers introduce measures that help protect the housing market from runaway price inflation,” said Phil Soper, president and CEO, Royal LePage, “However, natural supply and demand forces will always triumph over regulatory tinkering. Attempting to use public policy to steer property prices in huge, rapidly growing cities like Toronto and Vancouver is like a tugboat trying to turn an ocean liner. Consistent, measured policy can have a positive impact. Just don’t try to turn the market on a dime or you risk sinking the ship.”

“Insufficient housing supply in Canada’s largest cities will begin to drive significant price increases to higher than normal levels once the market adjusts to the new stress test,” continued Soper. “Aggressive home price inflation is still more of a threat today than the risk of a market crash in Toronto or Vancouver. On the other side of the coin, regions where demand is soft and already struggling to absorb the supply of homes for sale may have difficulty adjusting to these measures.”

Decreasing, or already low, inventory levels are expected to continue to define market characteristics of many large urban centres including the Greater Toronto Area, Greater Vancouver, Ottawa and Montreal. Further adding to the already bloated housing demand backlog, British Columbia and Ontario both experienced a surge in interprovincial migration in 2017, putting increased pressure on Greater Vancouver and the Greater Toronto Area housing markets. Demand from immigration, alongside demand from Peak Millennials[1] who are increasingly becoming of homebuying age, will continue to outpace supply.

“Royal LePage’s research into Peak Millennials[2] shows that younger Canadians desire to own their own homes with the same conviction as their parents before them,” said Soper. “Eighty-seven per cent see real estate as a good financial investment. The tight rental market is reflective of their dreams sitting on hold while they save for a downpayment. Of course there will be those who are priced out of a market altogether. They will continue renting and this will drive demand for investor properties.”

According to a recent Royal LePage Advisor Survey[3] on rental demand, 76 per cent of Royal LePage agents who offer rental services in the Greater Toronto Area saw a year-over-year increase in multiple offers and 68 per cent of those respondents cited affordability as a barrier to homeownership as the number one factor driving rental demand. In Greater Vancouver, 59 per cent of respondents servicing the Vancouver area saw a year-over-year increase in multiple offers for rentals. As a result, the pipeline of potential homebuyers providing a market price floor is growing and this growth trend is expected to continue through 2018.

Canada’s economy is expected to expand by 2.1 per cent in 2018, with all provinces, with the exception of Newfoundland, expected to see growth. Economic growth is an important driver of healthy housing markets.

“Most Canadians know how important the resource sector is to our economy but fewer understand just how important the real estate industry is to Canada,” said Soper. “In 2016, 13 per cent of the country’s GDP was driven by real estate. In British Columbia, that number was closer to 18 per cent.”

“When people are confident about their jobs and optimistic about the health of their country and their city, they will invest in a home,” Soper concluded. “At projected levels of demand, Canadian housing is poised for growth for years to come.”

Regional Pricing Forecasts (Listed by population size) 

Greater Toronto Area

Home prices in the Greater Toronto Area are expected to increase 6.8 per cent in 2018, rising to an aggregate[4] price of $901,392. This will largely be driven by price appreciation in the condominium market as demand for entry-level properties is expected to continue to surge. The Greater Toronto Area’s thriving economy and growing population has been supportive of an expanding housing market and this is expected to continue throughout 2018.

As a result of the incoming OSFI stress test, sales for detached properties are expected to soften in the first half of the year as both buyers and sellers adjust their price expectations. However, sales volumes for the full year are expected to remain at a similar pace as 2017.

“Relative to recent years, 2018 is expected to be a good year for buyers and this is a continuation from what we are currently seeing in the market today,” said Shawn Zigelstein, sales representative, Royal LePage Your Community Realty. “While the condo market should continue to see price growth from high demand, buyers looking at detached properties in the first quarter will be able to ask for conditions, have a much greater selection and should be competing against fewer multiple offers.”

Greater Montreal Area

Home prices in the Greater Montreal Area are expected to increase 5.5 per cent in 2018, rising to an aggregate price of $408,285. Among the economic factors supporting the Montreal real estate market momentum is ongoing employment growth seen across the region. In November, the province reached its lowest unemployment rate since January 1976, at 5.4 per cent, while Montreal recorded a 6.6 per cent rate during the same period. According to the Conference Board’s Consumer Confidence Index for Quebec[5], the proportion of Quebecers who feel that it is a good time to make a major purchase, such as a property, increased in November to 45.6 per cent, an unprecedented rate in more than 10 years.

Purchases made by foreign buyers in high-end neighbourhoods such as downtown, Westmount and Ville Mont-Royal are expected to continue. The strong local economy and relative affordability are credited for driving consumer demand from this demographic.

“The economic health of Montreal continues to positively affect real estate transactions in the area,” says Dominic St-Pierre, senior director, Royal LePage, for the Quebec region. “We are confident that the market will remain stable and strong within the next year. Our forecast takes into account that the upcoming OSFI stress test, as well as potential interest rates hikes, may cool down the housing market during the first half of 2018.”

Greater Vancouver

Home prices in Greater Vancouver are expected to increase 5.2 per cent in 2018, rising to an aggregate price of $1,353,924 as low supply continues to put upward pressure on the housing market. Further enhancing the housing market is British Columbia’s economy, which is poised to be a top performer among the provinces in 2018. One potential risk to the region’s housing market is further interest rate hikes as home prices are substantially higher in this region when compared to other Canadian markets. Interest rate hikes generally put upward pressure on the Canadian dollar, which also stifles interest from foreign buyers.

A trend that is expected to continue to strain the housing market is the hesitation from homeowners to put their properties on the market in fear that they will not be able to find another property. This will be amplified by the incoming OSFI stress test as some potential move-up buyers may not qualify for financing a new property. This lack of movement is expected to further constrain the supply of entry-level properties.

“We are watching how the new OSFI stress test will impact the Greater Vancouver market,” said Randy Ryalls, general manager, Royal LePage Sterling Realty. “Low inventory will continue to put upward pressure on prices. However, with the introduction of the stress test, as well as other factors such as potential interest rate hikes, price growth will likely be limited to mid-single digits.”

Ottawa

Home prices in Ottawa are forecast to increase 3.2 per cent in 2018, rising to an aggregate price of $458,208, reflecting the strong economic growth anticipated in the region through next year. Currently, housing inventory in the Ottawa market is very low and this trend is expected to continue throughout 2018, putting upward pressure on home prices.

As demand in the region is exceptionally high, the incoming OSFI stress test is expected to be quickly absorbed, limiting impacts on both home sales and prices.

“Ottawa is known for its steady growth and we expect consumer confidence to remain high throughout 2018,” said Hanna Browne, broker, Royal LePage Team Realty. “Most buyers who migrate to Ottawa have found employment locally prior to arriving, however, we are still seeing a surge of demand from buyers employed in Toronto who have the ability to work remotely full or part-time.”

Calgary

Home prices in Calgary are forecast to increase 2.3 per cent in 2018, rising to an aggregate price of $494,109 as the region further emerges from recovery. The region’s housing market has been supported by stabilizing oil prices and improving employment rates. While it could take several years for the economy to improve to pre-downturn levels, Alberta is poised to be one of the fastest growing economies in 2018. In turn, this will likely further improve consumer confidence. While the energy sector will continue to be the most important factor influencing the housing market, the region has seen growth in non-energy sectors helping to mitigate risk through a more diversified economy.

Though the incoming OSFI stress test is expected to slow sales at the beginning of the year, buyers and sellers are expected to adjust, and the delayed market could result in brisker sales beginning in late spring, potentially finishing strong at the end of the year.

“Continued strong competition for homes priced between $400,000 and $500,000, coupled with the incoming OSFI stress test, will likely push first-time buyers into the condo segment where they have ample selection at affordable prices,” said Corinne Lyall, broker/owner, Royal LePage Benchmark. “One positive impact of the measure may be that it will improve the health of the condominium market.”

Edmonton

The aggregate home price in Edmonton is expected to decrease 1.5 per cent in 2018 and end the year at $382,180. While Edmonton’s economy has stabilized, the region has not seen a significant improvement in employment, which is needed to lift home prices. On a positive note, the Conference Board of Canada is predicting Edmonton to show modest but sustainable GDP growth of 2.2 per cent in 2018.[6]

Although the impact of the OSFI stress tests is expected to be less pronounced compared to previous measures targeting first-time buyers, sales in the beginning of the year will be slower as move-up buyers who do not meet new financing criteria temporarily move to the sidelines. However, sales for the full year are expected to be similar or slightly higher compared to 2017 levels.

“The best advice I can give a seller in Edmonton is to make sure your pricing is very accurate,” said Tom Shearer, broker and owner, Royal LePage Noralta. “A trend we will continue to see in 2018 as we remain in a buyer’s market, is heightened price sensitivity. Buyers expect to negotiate within 2 to 3 per cent, and if you are outside that range they just move on.”

Winnipeg

Home prices in Winnipeg are expected to increase 4.0 per cent in 2018, rising to an aggregate price of $315,120. The region’s economy has benefitted from an increase in population and a low unemployment rate, which are expected to continue to put upward pressure on home prices and help maintain strong sales activity consistent with 2017 levels.

Strong demand for housing and low inventory is expected to continue through 2018, mitigating the dampening effect of the incoming OSFI stress test and limiting its impact to the first quarter.

“New regulations often create a ‘wait-and-see’ approach as buyers and sellers try to determine the long term impact,” said Michael Froese, managing partner, Royal LePage Prime Real Estate. “The strength of our economy and housing affordability are much more significant in determining the health of our real estate market than the expected impact from the incoming OSFI stress test.”

Halifax

Home prices in Halifax are expected to increase 2.5 per cent in 2018, rising to an aggregate price of $326,975. The region’s economy has been expanding and the manufacturing sector, a key indicator for the region, is expected to continue growing through 2018. The region’s housing market has benefitted from both population and job growth. Inventory in the downtown core is expected to remain low and sales are expected to increase modestly by the end of 2018.

“We don’t expect the incoming OSFI stress test to have a significant effect on Halifax’s housing market. Homes are affordable and buyers rarely extend themselves,” said Matt Honsberger, president, Royal LePage Atlantic. “Our economy is a good news story and we expect that it will be the biggest driver of price appreciation in 2018.”

Regina

Home prices in Regina are expected to increase 0.7 per cent in 2018, rising to an aggregate price of $329,289. Employment from a modestly improving energy sector and international immigration is expected to put upward pressure on both home prices and sales. However, a net loss from interprovincial migration and a surplus of inventory will keep price appreciation at a modest pace. The region continues to be heavily reliant on potash and energy. Any improvement in either sector could lift home prices in 2018.

“The region is expected to remain a buyer’s market throughout 2018. Home sellers need every available tool to properly market their home if they want to sell this coming year,” said Mike Duggleby, broker and managing partner, Royal LePage Regina Realty. “The most important factor to get right is pricing. Buyers have enough selection that they won’t consider a property that isn’t already priced in a competitive range.”

Royal LePage Market Survey Forecast 

Download Chart (.pdf)

About the Royal LePage Market Survey Forecast

The Royal LePage Market Survey Forecast provides year-over-year price expectations for Canada’s nine largest markets. Housing values are based on the Royal LePage National House Price Composite, produced 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.