Royal LePage House Price Survey Released October 13, 2022
Royal LePage forecast adjusted downward: National aggregate home price set to end year modestly below 2021 following third quarter price declines in majority of Canadian markets
National aggregate home price posts second consecutive quarterly decline in Q3
Third quarter highlights:
- National aggregate home price increased 3.3% year-over-year in third quarter of 2022; decreased 4.9% quarter-over-quarter
- Prices remain well above pre-pandemic levels; Canada’s national aggregate home price increased 25.4% in Q3 over the same quarter in 2020, and 21.5% over the same quarter in 2019
- National aggregate home price for the final quarter of the year forecast at -0.5% compared to Q4 of 2021, giving up gains made early in 2022
- 58 of the report’s 62 regional markets posted quarterly aggregate home price declines in Q3
- Prices decline on a quarterly basis in Greater Montreal Area for the first time in more than five years as market activity drops, following trend set in greater regions of Toronto and Vancouver in Q2
- Major markets in Atlantic Canada and the Prairies show modest quarterly price declines in Q3; Calgary and Edmonton markets faring better than other major cities
According to the Royal LePage House Price Survey released today, the aggregate price of a home in Canada increased 3.3 per cent year-over-year to $774,900 in the third quarter of 2022. On a quarterly basis, the aggregate price of a home in Canada decreased 4.9 per cent; the second consecutive quarterly decline recorded. This is reflective of a continued softening of home prices in markets across the country.
Royal LePage is forecasting that the aggregate price of a home in Canada will decrease 0.5 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, reflecting an expected flattening or modest decrease of prices through the remainder of the year, and following quarterly declines in a majority of Canadian markets in the third quarter. Of the report’s 62 regions, only four markets posted a quarterly aggregate home price increase in the third quarter (St. John’s, Charlottetown, Montreal South Shore, Saskatoon).
“September did not bring the typical seasonal lift in the number of homes trading hands in this country, a clear indication that our housing market continues to adjust to higher borrowing costs,” said Phil Soper, president and CEO of Royal LePage. “Home prices follow sales volume trends, which means we will see further softening in the final months of the year. Our revised outlook has national prices at just below where we ended 2021, erasing the gains made in the first quarter of 2022.”
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 2.0 per cent year-over-year to $806,100, while the median price of a condominium increased 6.1 per cent year-over-year to $566,100. 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.
In the third quarter, the aggregate price of a home in Canada recorded an increase of 25.4 per cent over the same period in 2020, and 21.5 per cent over the same period in 2019.
“Home sales volumes have fallen in the face of economic uncertainty and rising rates, but so too have the number of properties available to purchase. With demand and supply falling in tandem, there is limited downward pressure on prices. Canadian home values should end the year well above pre-pandemic levels, retaining much of the gains made during the real estate boom of 2020 and 2021,” said Soper.
The Greater Montreal Area posted a quarterly decline in its aggregate home price for the first time in more than five years, down 5.3 per cent in the third quarter of 2022. This follows similar declines seen in the greater regions of Toronto and Vancouver, beginning in the second quarter.
“While Greater Montreal’s real estate market proved more resilient than the country’s two other largest urban centres in the spring, the region saw a material decline in sales activity during the summer, as buyer demand dwindled in the face of subsequent interest rate hikes. Sales activity in the country’s largest urban areas remains constrained as global policy makers tackle the scourge of inflation,” added Soper.
Major centres in the Prairies and Atlantic Canada also began to show price depreciation in the third quarter, although Calgary and Edmonton posted more moderate declines, due to their relative affordability and strong migration from other provinces.
With so many would-be buyers waiting on the sidelines, sales activity has weakened across the country, as evidenced by a drop in appraisal applications in 2022. According to RPS Real Property Solutions, requests for property appraisals were down 16 per cent year-over-year in the month of September, and down seven per cent year-to-date; an indication that fewer homes are trading hands. Soper warned that a flood of pent-up demand will eventually return to the market once consumer confidence is restored.
“While sales volumes are well off the pandemic-fueled peak, many buyers remain active in today’s market. Some are motivated to transact before their locked-in mortgage pre-approval rates expire. Others are encouraged by a rare drop in home prices, the lack of bidding wars and the ability to include conditions in purchase offers,” he added. “At the first indication that interest rates have ended their climb and home prices have stabilized, I would expect a sharp increase in those entering the market as the need for housing has not diminished one bit. And regrettably, Canada continues to suffer from a severe shortage of housing supply.”
A recent Royal LePage survey found that almost one in five Canadians (19%) have postponed or deprioritized their home buying plans this year, due to the increased cost of living, including higher interest rates and rising inflation. That figure rises to 29 per cent among Canadians aged 18 to 34. Overall, of those who said they have modified their plans, 40 per cent said they still plan to buy, but at a later date.
Royal LePage House Price Survey Chart: royal_lepage_national_house_price_composite_in_the_third_quarter_2022
Royal LePage Forecast Chart: royal_lepage_market_survey_forecast_q32022