Royal LePage’s Q2 2023 Home Price Update and Market Forecast
Home buyers remain determined while sellers step back in response to additional interest rate hikes: Royal LePage.
Home prices expected to hold steady through remainder of 2023, despite anticipated drop in activity following second consecutive increase to Bank of Canada’s overnight lending rate.
Second quarter highlights:
- National aggregate home price remained almost flat year-over-year in Q2 2023 (-0.7% over Q2 2022) and increased 4.0% quarter-over-quarter (second consecutive quarterly increase)
- Aggregate price of a home in Canada in Q2 2023 sits just 5.6% below the peak reached in Q1 of last year
- 94% of regions in the report posted quarterly aggregate home price appreciation
- National year-end forecast updated. Prices in Q4 2023 now expected to rise 8.5% over final quarter of 2022; essentially flat over the next six months
- Chronic shortage of housing supply, due in part to sellers’ hesitancy to list, continues to put upward pressure on home prices
- Royal LePage urges officials to quickly increase support for more development, including affordable, purpose-built rental buildings
According to the Royal LePage House Price Survey released today, the aggregate price of a home in Canada decreased modestly by 0.7 per cent year-over-year to $809,200 in the second quarter of 2023, indicating that nationally, the real estate market is close to the point where it will have recovered fully from 2022’s post-pandemic market correction. On a quarter-over-quarter basis, the aggregate price of a home in Canada rose 4.0 per cent in Q2. This was the second consecutive quarter to show positive growth following a rapid decline in prices over the last year as a result of the Bank of Canada’s aggressive interest rate hike campaign, which began in March of 2022.
( 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.)
“Almost all Canadian homeowners have seen the value of their properties appreciate handsomely over time. A few who purchased at the tail end of the pandemic-fueled real estate boom saw the value of their homes drop below purchase price during the subsequent market correction,” said Phil Soper, president and CEO of Royal LePage. “We are close to that pivotal point where people who purchased at the peak would break even if they sold today.
“The Bank of Canada’s prolonged series of interest rate hikes has changed where and how people live. It has pushed some buyer hopefuls to choose less expensive housing types or neighbourhoods. Others have chosen to relocate to more affordable markets across their province or across the country. And, some buyers have been pushed to the sidelines indefinitely,” Soper continued. “Economic uncertainty has caused some potential sellers to reevaluate their plans as well. The worry that they will be unable to find the move-up home they need in today’s tight market is a major concern. Further, there are those who secured fixed-rate mortgages at generational lows of two per cent or even less, who are understandably reluctant to wade back into a market with substantially higher borrowing costs. Fewer sellers mean fewer listings, which adds further pressure to our chronic shortage of inventory. Access to affordable housing in Canada will continue to be a major social issue.”
Royal LePage House Price Survey Chart: royal_lepage_national_house_price_composite_in_the_second_quarter_of_2023
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