Royal LePage adjusts 2022 national home price forecast lower to 5% over 2021 to reflect softening markets in Ontario and British Columbia
Second quarter records first quarter-over-quarter national decline since Q1 2019
Second quarter highlights:
- National aggregate home price increases 12.1% year-over-year in second quarter of 2022; decreases 4.9% quarter-over-quarter.
- Royal LePage reduces national home price forecast to +5.0% in fourth quarter of 2022; expects home prices to hold relatively flat through the second half of the year in greater regions of Toronto and Vancouver. Greater Montreal Area expected to see continued price appreciation.
- An uneven market recovery is expected as some regions experience continued price appreciation, while others soften.
- Interprovincial migration to affordable real estate markets supports home price growth in Alberta, Prairies and Atlantic Canada.
- Royal LePage cautions policy makers that growing inventory is masking an acute urgency to solve Canada’s housing supply crisis.
TORONTO, July 13, 2022 – According to the Royal LePage House Price Survey released today, the aggregate[1] price of a home in Canada increased 12.1 per cent year-over-year to $815,000 in the second quarter of 2022. On a quarterly basis, the aggregate price of a home in Canada decreased 4.9 per cent in the second quarter after reaching record year-over-year highs in Q1. This is reflective of softening home prices in markets that saw exceptional price growth during the pandemic. The second quarter of 2022 is the first quarter in more than three years (since Q1 2019) to post a quarter-over-quarter decline in home prices.
Royal LePage is forecasting that the aggregate price of a home in Canada will increase 5.0 per cent in the fourth quarter of 2022, compared to the same quarter last year. The forecast has been revised downward from the previous quarter following more aggressive than expected interest rate hikes by the Bank of Canada, resulting in an expected temporary drop in demand in parts of southern Ontario and British Columbia.
“Some of the heat that was driving the market cooled during the quarter as rising interest rates coupled with economic uncertainty undermined consumer confidence and pushed buyers to the sidelines,” said Phil Soper, president and CEO of Royal LePage. “We have significantly reduced our outlook for 2022, however home prices are still forecast to end the year higher than 2021 and well above pre-pandemic norms. Following record price gains across the country, numerous markets in southern Ontario and parts of Greater Vancouver – specifically those that saw some of the highest price appreciation over the last two years – experienced a second quarter decline. I expect this highly unusual downward movement in home values will be short-lived as the country’s chronic housing shortage has not been resolved.
“Barring a sharp increase in the inventory of properties for sale in this country, which seems unlikely given our exceptionally low level of unemployment, growing population and miniscule rate of mortgage default, we expect that the second quarter produced most of the price declines we will see this cycle,” continued Soper.
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 12.4 per cent year-over-year to $859,500, while the median price of a condominium increased 12.2 per cent year-over-year to $589,000. 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.
Supporting the expectation that resale home prices will hold their value for the remainder of 2022 is continued household formation from peak millennials who are reaching traditional home-buying age, high levels of immigration, a healthy job market and the high construction cost of new homes. Since 1980, there have only been seven instances of a 3-month decline in resale home prices of 10 per cent or more, with the most recent instance occurring in May, 2022.[2]
“We don’t expect to see much movement in housing values through the balance of the year,” added Soper. “Canada is experiencing strong growth in household formation, so positive economic news, such as a signal that rates have reached a level where inflation can be managed, should trigger a return to rising property values. The small percentage of consumers who purchased properties at 2022’s February/March peak will have seen a short-term decline in the value of their homes, but there is little doubt they will soon make up that lost ground.”
Royal LePage is providing caution to policy-makers who may see growing inventory as a sign that Canada’s housing supply crisis has become less urgent compared to election periods when Canadians from coast to coast expressed concern and sought action to improve the supply of housing.[3]
“Although demand has temporarily weakened, Royal LePage is concerned that this short-term reprise from rapidly rising home prices may cause decision makers to shift their attention to other issues, thinking Canada’s housing supply crisis can wait — it cannot,” continued Soper. “The current market correction will create pent-up demand. A growing domestic buyer pipeline coupled with the need to house hundreds of thousands of new Canadians threatens to far outstrip the tepid pace of new home construction.”
In search of a comfortable lifestyle that affordable housing provides, households are continuing to leave the more expensive regions of the country and migrate towards those where housing is more affordable. During the first quarter of 2022, there was migration out of Ontario and towards British Columbia, Alberta, Quebec and Nova Scotia, which is supporting home price growth in those regions. Excluding the greater regions of Toronto and Vancouver and the city of Ottawa, all remaining major forecast regions saw quarter-over-quarter aggregate home price growth (Halifax, Montreal, Winnipeg, Regina, Calgary and Edmonton).
Royal LePage House Price Survey Chart: rlp.ca/house-prices-Q2-2022
Royal LePage Forecast Chart: rlp.ca/market-forecast-Q2-2022
REGIONAL SUMMARIES
Greater Toronto Area
The aggregate price of a home in the Greater Toronto Area increased 12.8 per cent year-over-year to $1,167,000 in the second quarter of 2022. On a quarterly basis, the aggregate price of a home in the GTA decreased 8.1 per cent in the second quarter, after reaching record year-over-year highs in Q1. This is the first quarterly decline in the region since Q1 of 2018.
Broken out by housing type, the median price of a single-family detached home increased 10.5 per cent to $1,437,600, while the median price of a condominium increased 17.3 per cent year-over-year to $738,800 in the second quarter of 2022.
“The city of Toronto and the greater region, along with many secondary cities in the Golden Horseshoe, have seen housing demand slow in recent months as many buyers take a step back in an attempt to time the market,” said Karen Yolevski, chief operating officer, Royal LePage Real Estate Services Ltd. “Buyer behaviour has shifted. They are in a wait-and-see pattern, assessing the impact of further expected interest rate hikes and rising inflation. For the first time since the start of the pandemic, the real estate market is experiencing a more normal summer slowdown in activity.”
Yolevski noted that the softening market is providing a rare opportunity to first-time buyers who have been unable to transact over the last two years. It’s also creating an opportunity for renters who are considering buying, as purchasing has become slightly more attractive.
“We’ve reached a tipping point for renters, as rental rates continue to increase and inventory in the resale market rises,” said Yolevski. “Those who are able to save enough of a down payment may feel they have more choice in today’s market.”
In the city of Toronto, the aggregate price of a home increased 11.7 per cent year-over-year to $1,245,600 in the second quarter of 2022. During the same period, the median price of a single-family detached home increased 9.3 per cent to $1,694,900, while the median price of a condominium increased 6.8 per cent to $742,600.
“The fundamentals of Toronto’s housing market have not changed. While inventory has been creeping up due to consumers moving to the sidelines, the housing supply crisis in Toronto remains a significant long-term challenge,” said Yolevski.
Yolevski expects that prices will remain flat through the remainder of 2022.
Royal LePage is forecasting that the aggregate price of a home in the Greater Toronto Area will increase 3.0 per cent in the fourth quarter of 2022, compared to the same quarter last year. The previous forecast has been revised downward, as a result of softening demand due to more aggressive than expected interest rate hikes by the Bank of Canada.
Royal LePage House Price Survey Chart: rlp.ca/house-prices-Q2-2022
Royal LePage Forecast Chart: rlp.ca/market-forecast-Q2-2022
Greater Montreal Area
The aggregate price of a home in the Greater Montreal Area increased 13.9 per cent year-over-year to $585,700 in the second quarter of 2022. Broken out by housing type, the median price of a single-family detached home increased 18.1 per cent to $660,400, while the median price of a condominium increased 11.7 per cent to $452,500 during the same period.
“We are seeing a shift in buyer behaviour in the real estate market, with rising interest rates being the main factor,” confirmed Marc Lefrançois, licensed real estate broker at Royal LePage Tendance in Montreal. “As the Bank of Canada announced interest rate hikes against the backdrop of high inflation, buyers began to seriously reassess their financial capacity, which reduced their enthusiasm and slowed down demand for properties in June. Sellers are not adjusting as quickly and are still keeping their expectations very high regarding the market value of their property. We are entering a new chapter signalling healthier price appreciation in the Greater Montreal Area and in the majority of Quebec markets during the second half of 2022,” said Lefrançois.
In Montreal Centre, the aggregate price of a home increased 9.3 per cent year-over-year to $702,700 in the second quarter of 2022. During the same period, the median price of a single-family detached home increased 6.2 per cent to $1,114,600, while the median price of a condominium increased 6.9 per cent to $535,100.
In the West Island of Montreal, there has been an apparent shift in buyer behaviour as of May, due to significant interest rate hikes and an increase in inventory. There was increased activity for properties below the million-dollar mark, with buyers rushing to purchase at previously locked in lower interest rates, before their rate guarantee expires.
“With financing rates approaching five per cent and set to rise even higher, there are budget implications for buyers,” noted Sean Broady, licensed real estate broker at Royal LePage Elite in Beaconsfield. “Market uncertainty and higher interest rates have put a damper on sales in the over 1-million-dollar price range as supply begins to outpace demand.”
Royal LePage is forecasting that the aggregate price of a home in the Greater Montreal Area will increase 12.5 per cent in the fourth quarter of 2022, compared to the same quarter last year. This is consistent with the Company’s earlier forecast for the region.
Royal LePage House Price Survey Chart: rlp.ca/house-prices-Q2-2022
Royal LePage Forecast Chart: rlp.ca/market-forecast-Q2-2022
Greater Vancouver
The aggregate price of a home in Greater Vancouver increased 9.1 per cent year-over-year to $1,311,900 in the second quarter of 2022. For the first time since Q3 of 2019, Greater Vancouver has posted a quarter-over-quarter decline in the aggregate home price, down 4.1 per cent over the first quarter of 2022.
Broken out by housing type, the median price of a single-family detached home increased 12.1 per cent to $1,822,300, while the median price of a condominium increased 12.0 per cent to $783,700 during the same period.
“Real estate activity in Greater Vancouver has slowed over the last few months. While prices continue to rise year-over-year, the rate of appreciation is slowing, and month-to-month we are seeing signs that balance is returning to the market,” said Randy Ryalls, general manager, Royal LePage Sterling Realty. “Scenarios are normalising. We are seeing an uptick in average days on market, buyers are taking a step back and putting conditions into their offers again, and sellers are no longer holding back offers. These are all signs that we are moving in the direction of more normal market conditions.”
In the city of Vancouver, the aggregate price of a home increased 11.7 per cent year-over-year to $1,457,200 in the second quarter of 2022. During the same period, the median price of a single-family detached home increased 12.7 per cent to $2,649,300, while the median price of a condominium increased 6.0 per cent to $820,200.
“Inventory continues to increase, and sales are down significantly from their peak in February and March,” said Ryalls. “This is good news for buyers, as some of those who were unable to transact in the last two years can now take advantage of this opportunity to get into the market with less competition and a bit more selection.”
Ryalls noted that evolving buyer behaviour is having an impact on the market.
“Many would-be buyers have moved to the sidelines as interest rates continue to increase. In addition, some are waiting to see what effect the proposed cooling-off period will have on the market. The B.C. government is currently reviewing recommendations from the provincial regulator,” said Ryalls.
Ryalls expects the typical pre-pandemic slowdown to continue this summer, followed by a slight boost of activity in the fall.
Royal LePage is forecasting that the aggregate price of a home in Greater Vancouver will increase 5.0 per cent in the fourth quarter of 2022, compared to the same quarter last year. The previous forecast has been revised downward, as a result of softening demand due to more aggressive than expected interest rate hikes by the Bank of Canada.
Royal LePage House Price Survey Chart: rlp.ca/house-prices-Q2-2022
Royal LePage Forecast Chart: rlp.ca/market-forecast-Q2-2022
Ottawa
The aggregate price of a home in Ottawa increased 11.5 per cent year-over-year to $800,300 in the second quarter of 2022. While home prices continue to show year-over-year growth, on a quarterly basis, the aggregate price of a home in Ottawa decreased 1.1 per cent in the second quarter of 2022.
Broken out by housing type, the median price of a single-family detached home increased 10.0 per cent to $930,500, while the median price of a condominium decreased 1.0 per cent to $416,900 during the same period.
“Despite recent interest rate hikes and increasing home prices, buyer demand remains strong in the city of Ottawa. However, in recent months homebuyers are proving more cautious, taking more time before making an offer and reintroducing conditions,” said John Rogan, broker of record, Royal LePage Performance Realty. “Inventory is beginning to creep up slowly, but demand continues to outpace supply. And, in some high-demand areas, a low supply of housing continues to drive multiple-offer scenarios.”
Rogan added that the city’s healthy economy, booming job market and relative affordability continue to attract buyers from other parts of the province and across Canada.
“Ottawa’s economy is historically very stable and the city remains an attractive destination, both for Canadians and internationals. It offers a desirable lifestyle for those looking for an alternative to the city of Toronto.”
Rogan expects the seasonal summer slowdown in activity and expected further interest rate hikes will put some downward pressure on prices in the months ahead, but believes prices will level off by the end of the year.
Royal LePage is forecasting that the aggregate price of a home in Ottawa will increase 10.0 per cent in the fourth quarter of 2022, compared to the same quarter last year. The previous forecast has been revised downward to reflect a shift to a more balanced market.
Royal LePage House Price Survey Chart: rlp.ca/house-prices-Q2-2022
Royal LePage Forecast Chart: rlp.ca/market-forecast-Q2-2022
Calgary
The aggregate price of a home in Calgary increased 8.4 per cent year-over-year to $616,300 in the second quarter of 2022. Broken out by housing type, the median price of a single-family detached home increased 10.9 per cent to $707,700, while the median price of a condominium increased 4.6 per cent to $236,500 during the same period.
“Calgary’s housing market remains very tight. Due to a lack of supply in detached houses, there continues to be competition from both local buyers as well those moving to Calgary from other provinces,” said Corinne Lyall, broker and owner, Royal LePage Benchmark. “Unit sales are historically high and while we do see new construction being built, it has not kept up with demand. Good product that comes to market, whether new build or resale, is being quickly absorbed.”
Lyall noted that a lack of rental properties has put upward price pressure on the resale market as rising costs and lack of availability have made purchasing a home more attractive for those who are able to get into the market.
“Buyers continue to find excellent value in Calgary’s condo market. The region has struggled with over-supply in recent years, which resulted in excellent selection and less competition than the single-family home market,” said Lyall. “Increasingly, we are seeing investors and property managers convert condos into long-term rentals. While this is improving rental availability, it is also creating more competition for buyers as product is coming off the market.”
Royal LePage is forecasting that the aggregate price of a home in Calgary will increase 8.0 per cent in the fourth quarter of 2022, compared to the same quarter last year. The forecast remains unchanged from the previous quarter as consumer confidence remains high, driven by a healthy economy and an affordable housing market that continues to drive migration to the province.
Royal LePage House Price Survey Chart: rlp.ca/house-prices-Q2-2022
Royal LePage Forecast Chart: rlp.ca/market-forecast-Q2-2022
Edmonton
The aggregate price of a home in Edmonton increased 6.8 per cent year-over-year to $459,200 in the second quarter of 2022. Broken out by housing type, the median price of a single-family detached home increased 6.8 per cent to $498,800, while the median price of a condominium increased 5.5 per cent to $212,000 during the same period.
“Real estate in Edmonton had a strong start to the year and it pulled a lot of the buyer demand to earlier in the year. June activity slowed to a pace that is more typical of July,” said Tom Shearer, broker and owner, Royal LePage Noralta Real Estate. “We are still in a seller’s market and inventory has been slowly building and buyers are finding selection is starting to improve. When they do find the right home, there are fewer competing offers.”
Shearer added that Edmonton’s real estate market is continuing to see demand from out-of-province buyers who are moving to the area, often without employment.
“Edmonton’s healthy job market and affordable homes offer a significant lifestyle boost for people willing to move from high priced cities. New construction is struggling to keep up with the demand,” Shearer added.
Royal LePage is forecasting that the aggregate price of a home in Edmonton will increase 9.0 per cent in the fourth quarter of 2022, compared to the same quarter last year. The forecast remains unchanged from the previous quarter as consumer confidence remains high, driven by a healthy economy and an affordable housing market that continues to drive migration to the province.
Royal LePage House Price Survey Chart: rlp.ca/house-prices-Q2-2022
Royal LePage Forecast Chart: rlp.ca/market-forecast-Q2-2022
Halifax
The aggregate price of a home in Halifax increased 13.8 per cent year-over-year to $525,800 in the second quarter of 2022. Broken out by housing type, the median price of a single-family detached home increased 12.7 per cent to $596,400, while the median price of a condominium increased 13.5 per cent to $430,700 during the same period.
“Halifax’s real estate market is shifting to a more healthy market. Buyers are able to put conditions on their purchase offers and local buyers are successfully transacting with less competition from outside the province,” said Matt Honsberger, broker and owner, Royal LePage Atlantic.
Honsberger added that an increase in inventory has offered buyers more choice but has not resulted in lower prices.
“It is a great time for move-up buyers because they are confident in their ability to find their next home, while selling their existing home at current market value,” said Honsberger. “Those who have struggled to buy over the last year or two now find themselves with an opportunity to get into the market with less competition.”
Royal LePage is forecasting that the aggregate price of a home in Halifax will increase 9.0 per cent in the fourth quarter of 2022, compared to the same quarter last year. The previous forecast has been revised downward to reflect a softening in buyer demand.
Royal LePage House Price Survey Chart: rlp.ca/house-prices-Q2-2022
Royal LePage Forecast Chart: rlp.ca/market-forecast-Q2-2022
Winnipeg
The aggregate price of a home in Winnipeg increased 11.5 per cent year-over-year to $392,600 in the second quarter of 2022. Broken out by housing type, the median price of a single-family detached home increased 10.9 per cent to $433,300, while the median price of a condominium increased 4.5 per cent to $252,900 during the same period.
“Over the last month we’ve seen a significant boost in inventory and a slight dip in demand, following very strong sales activity and price gains in April and May. The spring market got off to a much later start due to the extended winter weather,” said Michael Froese, broker and manager, Royal LePage Prime Real Estate. “Now that buyers have more selection and less competition, I think we’ll start to see prices level off. And, with interest rates expected to increase further, it’s going to create some breathing room for buyers in the months ahead.”
Froese noted that buyers are quick to adapt their behaviour to changing market conditions.
“Almost immediately we’ve seen a shift. Buyers are taking advantage of reduced competition and writing conditional offers again, including subject to sale, inspection and financing. Sellers tend to hold on to expectations a little longer when faced with a transitioning market,” said Froese. “It feels like we are moving towards a healthier, more balanced environment.”
Froese expects the slowdown to persist through the summer months and anticipates another rush of demand in the fall.
Royal LePage is forecasting that the aggregate price of a home in Winnipeg will increase 8.0 per cent in the fourth quarter of 2022, compared to the same quarter last year. The forecast remains unchanged from the previous quarter as consumer confidence remains high, driven by a healthy economy and an affordable housing market that continues to drive migration to the province.
Royal LePage House Price Survey Chart: rlp.ca/house-prices-Q2-2022
Royal LePage Forecast Chart: rlp.ca/market-forecast-Q2-2022
Regina
The aggregate price of a home in Regina increased 9.8 per cent year-over-year to $375,600 in the second quarter of 2022. Broken out by housing type, the median price of a single-family detached home increased 12.1 per cent to $409,000, while the median price of a condominium increased 4.1 per cent to $204,600 during the same period.
“Buyers are reacting to the current uncertainty in the market. In the last month, we’ve seen some frenzied buying among those with mortgage rate holds set to expire shortly, or those looking to transact prior to further expected rate hikes,” said Mike Duggleby, broker and owner, Royal LePage Regina Realty. “While interest rates remain historically low, these rapidly rising rates coupled with record high home prices are proving stressful for many of today’s first-time buyers.”
Duggleby noted that sales are down slightly compared to the same quarter last year, and inventory is up year-to-date.
“The supply of homes is increasing and I expect this trend will continue through the summer months. However, inventory remains well below historic norms. In some cases, although fewer than earlier in the year, well-priced properties in popular neighbourhoods are still selling in multiple-offer scenarios,” said Duggleby.
Royal LePage is forecasting that the aggregate price of a home in Regina will increase 7.0 per cent in the fourth quarter of 2022, compared to the same quarter last year. The forecast remains unchanged from the previous quarter as consumer confidence remains high, driven by a healthy economy and an affordable housing market that continues to drive migration to the province.
Royal LePage House Price Survey Chart: rlp.ca/house-prices-Q2-2022
Royal LePage Forecast Chart: rlp.ca/market-forecast-Q2-2022
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About the Royal LePage House Price Survey
The Royal LePage House Price Survey provides information on the most common types of housing, nationally and in 62 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.
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 approximately 19,000 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:
Stephanie Matthias
North Strategic on behalf of Royal LePage
stephanie.matthias@northstrategic.com
(416) 802-1612
[1] Aggregate prices are calculated using a weighted average of the median values of all housing types collected. Data is provided by RPS Real Property Solutions and includes both resale and new build.
[2] CREA Stats Centre, Actual Monthly Resale Data (not Seasonally Adjusted) for the National Average Resale Price. A 3-month decline is based on comparing the current National Average Resale Price to the monthly average 3 months prior (May 2022 versus February 2022).
[3] Canadians are taking their housing affordability concerns all the way to the ballot box in this federal election; Ontario voters head to the polls with housing supply crisis top of mind
