Millennials shift to the suburbs will drive up Canadian home prices next year, Royal LePage says
Millennials shift to the suburbs
will drive up Canadian home
prices next year, Royal LePage says
Canadian house prices are forecast to increase by 3.2 percent next year led by Montreal, Ottawa and Toronto as millennials shifting from condominiums spur demand alongside immigration and the waning impact of mortgage restrictions introduced last year, real estate agency Royal LePage says.
The price of a two-story detached house in Montreal may jump by 6 percent in 2020 to $581,300 in the fourth consecutive year of gains above the 4 percent level driven by positive economic indicators and a seller’s market, the agency said Thursday in its market forecast.
The corresponding price in Toronto may increase by 4.5 percent to $1,027,200 next year as low supply and growing population drive demand, Royal LePage said. Ottawa may see a 5 percent hike to $547,600 as government stability and growth in the high tech sector benefit the market, it said.
“The oldest peak millennials are now in their 30s,” Phil Soper, Royal LePage president, and CEO said in a statement. “With kids in hand and dog on a leash, these parents are now eyeing the suburbs that their baby boomer parents are so coveted. We predict that the period of disproportionately higher price appreciation in the condo segment is drawing to a close as interest in detached homes is reborn.”
Still, the agency forecast median prices for condominiums would increase next year by 6 percent in Toronto, 5 percent in Montreal, 3.5 percent in Ottawa and 3 percent in Vancouver.
Price increases in the rest of the country were subdued, with the price for a two-story detached house in Vancouver forecast to rise by 1.25 percent to $1,460,700, in Calgary by 1.75 percent to $523,100, in Edmonton by 0.75 percent to $438,700 and in Halifax by 1.25 percent to $340,600, the agency said.
Alberta’s market continues to struggle along with the energy sector’s woes although movement on pipelines and corporate tax cuts to attract business and employment could prove positive, according to Corinne Lyall, owner of Royal LePage Benchmark in Calgary, and Tom Shearer, owner of Royal LePage Noralta Real Estate in Edmonton.
“Calgary’s housing market will see some buoyancy but it’s not going to be immediate,” Lyall said. “We should still see more buyers entering the market this next year with continued low-interest rates, positive migration, and less choice to rent with tighter vacancy rates.”
We predict that the period of disproportionately higher price appreciation in the condo segment is drawing to a close as interest in detached homes is reborn
Phil Soper, Royal LePage president and CEO
Shearer said: “Sellers are compromising and buyers are realizing that prices are not going any lower. In 2020, we should see a modest price bump but we are also expecting a healthy gain in sales activity.”
Prices in Winnipeg and Regina for two-story detached homes are expected to fall next year by 0.25 percent and 0.5 percent to $322,600 and $386,000, respectively, the only places in the nine-city survey slated for decreases. Oversupply in Regina was cited as one reason.
Canada-wide, potential homebuyers who may have put plans on hold when more stringent mortgage rules were enacted last year have started to re-enter the market which will drive demand along with immigration, Soper said. Should the economy weaken and the Bank of Canada lowers interest rates, the effect could actually be higher prices, he said.
“Falling rates normally encourage new housing demand,” Soper said. “This would mean further upward price pressure in regions where employment remains healthy.”