[Royal LePage] Stable Growth Projected for House Prices in 2019
by Neils Mack | December 14, 2018
Following the rapid increase of house prices in 2016 and 2017 in many markets, correctional activities taken in 2018 will continue to have effect on the market in 2019, according to a recently published by RPS sister company Royal LePage. The tightened 2018 OSFI mortgage rules and previous hikes of the lending rate by the Bank of Canada are doing their part to stabilize the market.
“Markets aren’t perfect. They overshoot and then they must correct,” said Phil Soper, President and CEO, Royal LePage. “The Canadian housing market in 2019 will remain in the correctional cycle that began in 2018, where price gains and sales activity are below the long-term norm, after a few years of uncomfortably high major market price increases. This is a Canada-wide statement, and of course our huge nation is a market of markets. To provide insight that is useful for consumers and business planners alike, our forecasting is both nationwide and region by region.”
While these correctional actions are doing their part to stabilize prices – the market will still see a modest increase in house prices in 2019. This is due to the strong economy in Canada, according to Statistics Canada the country is currently seeing a rate of unemployment at 5.6 per cent – unemployment rates have not been this low since 1976. Due to this strength Royal LePage is forecasting a modest average growth of house prices 1.2 per cent in Canada in 2019.
This more sustainable growth combined with strong employment rates will allow some Canadians to catch up to the growth in prices may create an inventory challenge. “More than an affordable housing problem, we will once again be facing an overall housing supply crisis," said Mr. Soper.
Within the Canadian market certain regional markets show persistence and will deviate from the national average. Montreal is forecasted to lead price growth by 3 per cent, followed by Ottawa at 2.5 per cent.
“With healthy price increases projected in 2019, we're forecasting the housing market in the Greater Montreal Area to outperform other Canadian urban centres," said Dominic St-Pierre, Vice President and General Manager, Royal LePage, for the Quebec region.
According a report from CREA, Montreal shows continued strength due in part to buyers and investors avoiding highly priced markets in Vancouver and Toronto choosing to purchasing in Montreal where the price inflations of 2016-17 weren’t as profound.
On the other hand, house prices in certain markets are projected to decrease throughout 2019. In Regina a combined effect of low commodity prices and new mortgage regulations have seen the market struggle with house prices reaching a low last seen in the 2008 recession as reported by Mike Duggleby, broker and managing partner, Royal LePage Regina Realty. These challenges in the Regina market are projected to continue to affect prices, reducing by another 4.7 per cent in 2019.
Similar effects that are steering Regina’s market also effect Edmonton and Calgary – prices are said to decrease by 1.9 and 2.3 per cent respectably.
The following chart summarizes the report:
|Region||2018 Aggregate Home Price
(Year End Estimate)
|2019 Aggregate Home Price
|Greater Toronto Area||$844,000||$854,552||1.3%|
|Greater Montreal Area||$409,000||$421,306||3.0%|
For further details view the full Royal LePage report here.
About the Royal LePage Market Survey
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.