Cooling of Canada's Hottest Real Estate Markets Delayed Again

Canada's residential real estate market posts strongest growth in five years in the second quarter of 2016

Central bankers expected to keep interest rates lower for longer in light of Brexit and global uncertainty

TORONTO, July 13, 2016 /CNW/ - Canada's residential real estate market continued to show strong appreciation in the second quarter of 2016, posting the highest national year-over-year gain seen in five years, according to the Royal LePage House Price Survey1 and Market Survey Forecast released today.  Amid continued world economic uncertainty, the historically low interest rate environment that has fueled Canada's real estate market growth in recent years – most notably in Greater Vancouver and the Greater Toronto Area (GTA) – is expected to continue longer than anticipated.  This extended period of low-cost borrowing will in turn further delay the cyclical cooling of Canada's hottest real estate markets, originally forecasted for the second half of 2016.

The Royal LePage National House Price Composite, compiled from proprietary property data in 53 of the nation's largest real estate markets, shows that the price2 of a home in Canada increased 9.2 per cent year-over-year to $520,223 in the second quarter of 2016.  During the same period, the price of a two-storey home rose 10.7 per cent year-over-year to $619,671, the price of a bungalow increased 7.9 per cent to $437,121, and the price of a condominium increased 4.2 per cent to $348,189.  Looking ahead to the remainder of 2016, Royal LePage forecasts that the aggregate price of a home in Canada will increase 12.4 per cent when compared to year end 2015.

"Our forecasting models, which pointed to a slowing housing market as the year progressed, included a modest increase in the cost of borrowing," said Phil Soper, president and chief executive officer, Royal LePage. "Economic and social disruptions have rocked the world once again, introducing new risks and making it very likely that the Bank of Canada will leave interest rates as-is for now. Few industries are as rate sensitive as real estate. We don't see even a mild correction for either the Toronto or pistol-hot Vancouver markets in 2016."

"Our call for 12.4 per cent national price appreciation in the final quarter of this calendar year as compared to the final quarter of last year, is a landmark in Canada.  I believe it is the highest value put forward by any serious forecasting agency since the turn of the century," added Soper.

On June 23, 2016, Britons voted to leave the European Union, surprising financial markets worldwide.  The British currency plummeted and the value of equities around the world swung wildly. Adding to economic uncertainty is an uncharted road ahead for decoupling the U.K. from the E.U., a process which some have predicted could take two years. This added dimension of uncertainty will encourage central bankers in Canada and abroad to keep rates lower for longer.

"Some have suggested that Britain's exit from the E.U. will drive more foreign money into the relative safety of Canada's real estate markets," said Soper.  "We anticipate the impact, if any, will be seen in the commercial property sector and not in housing markets. Beyond Europe, our research does point to increasing Vancouver and Toronto region foreign buyer3 activity in residential markets this quarter. Canada remains a favoured nation for the world's real estate investors."

According to a survey4 of Royal LePage real estate advisors working within these regions, 71 and 74 per cent said that year-over-year home purchases by international buyers have increased in the second quarter in the GTA and Greater Vancouver, respectively. Still, 35 and 37 per cent of respondents believe that foreign ownership accounts for less than 10 per cent of the GTA and Greater Vancouver housing markets, respectively. 

"At Royal LePage, we see residential real estate as a long-term investment supporting family life. A home is ill-suited as a buy-and-flip investment.  People that engage in this kind of activity are inevitably burned when a market slows and the time it takes to sell the property increases substantially. We applaud the efforts of all levels of government to better understand Canada's housing market, through a coordinated effort to gather and analyze real estate data. Still, we remain convinced that heavy-handed use of tax policy in an effort to artificially influence asset values in an open-market economy like ours is fraught with peril, particularly in a cyclical industry like housing," concluded Soper.

Provincial and City Summaries & Trends

Since the 2014 collapse of oil prices and the subsequent drop in the value of the Canadian dollar, the nation's economy has been dominated by growth in British Columbia, Ontario, Manitoba and Quebec – the four provinces most tied to the finished goods and services export sector, and by extension, to the health of the U.S. economy. The negative impact of the downturn in the resource sector, in contrast, remains concentrated in Alberta, Saskatchewan, New Brunswick and Newfoundland and Labrador.  Across the country, provincial economic trends can be seen influencing residential real estate market performance in most cities.

British Columbia's economy has outperformed the balance of the country for two years running and is expected to continue doing so into 2017. This economic strength is echoed in the province's housing market.  In the second quarter, Greater Vancouver posted an aggregate year-over-year home price increase of 24.6 per cent to a median price of $1,098,599.  During the same period, the city of Vancouver posted a year-over-year gain of 27.5 per cent to $1,330,531, while surrounding areas such as West Vancouver and Richmond posted even higher increases of 29.7 per cent and 28.3 per cent to median prices of $3,093,776 and $972,443, respectively.

Manitoba has been cited as one of the provinces that will outpace the national economy in 2016 and 20175. This is attributed mainly to its strength in a diverse set of industries such as agriculture, health sciences, transportation, manufacturing and business services, rounding off the edges of some of the would-be effects of the commodities downturn.  In Winnipeg, the aggregate price of a home increased by a moderate 2.0 per cent in the second quarter to a median price of $285,358, with the detached two-storey home category posting the highest year-over-year price gain of 3.7 per cent to $314,589.

Ontario is expected to be one of the fastest growing provinces in 2016, with employment growth running at twice the national average so far this year. Very strong U.S. employment growth in June should once again stimulate Ontario's export sector, after a tepid performance in the second quarter, as more American businesses look to Canada for affordable goods and services.  The GTA, the province's largest market, saw notable year-over-year home price appreciation of 10.2 per cent to a median price of $656,365, while home price appreciation in the city of Toronto remained in-line with recent quarters, rising 8.4 per cent to $680,096.  Surrounding suburbs such as Richmond Hill, Whitby and Oshawa continued to outpace home price appreciation in the core, posting year-over-year aggregate home price gains of 21.3 per cent, 17.1 per cent and 16.7 per cent, to $992,632, $547,304 and $409,452, respectively.  Meanwhile, in the nation's capital home prices remained steady in the second quarter, with the aggregate price of a home in Ottawa increasing 2.3 per cent to a median price of $401,288.

Strength in exports to the U.S. is expected to continue to support provincial growth in the remainder of the year in Quebec. Last month Fitch Ratings revised its outlook for the province from "negative" to "stable", citing Quebec's diverse economy as a key strength.  An increase in full-time jobs and renewed stability and confidence in Quebec's economy is being reflected in the province's residential housing sector, particularly in the Montreal region.  In the second quarter, the aggregate price of a home in the Greater Montreal Area increased by a healthy 3.5 per cent year-over-year to $344,620, while the aggregate price of a home in Montreal Centre rose 4.9 per cent to a median price of $416,953. This is indicative of a transition in the region, which is currently seeing a trend toward a seller's market in the two-storey home segment, and a balanced market for other property types.

The Conference Board of Canada has projected that Alberta's economy will dip 2.0 per cent this year as a result of the sharp pullback in drilling and capital investment in the energy sector, along with the impact of the Fort McMurray fires. Despite economic setbacks, residential real estate prices in the region have not seen the depreciation many onlookers had expected.  In the second quarter, the aggregate price of a home in Calgary decreased 1.8 per cent year-over-year to $454,790, while the aggregate home price in Edmonton dipped 1.2 per cent to $377,337

Like Alberta, Saskatchewan is being hit by weakness in the energy sector, with more than 9,000 residents having dropped out of the workforce altogether. As a result, home prices in the province's major centres have posted slight declines.  According to the Royal LePage National House Price Composite, the aggregate price of a home in Saskatoon slipped 0.2 per cent year-over-year to $370,125, while the aggregate home price in Regina decreased slightly, falling 1.7 per cent to $323,612.

Atlantic Canada saw mixed results in the second quarter, with Fredericton posting the highest year-over-year aggregate home price appreciation at 3.8 per cent to $235,425, with Moncton close behind, rising 3.0 per cent to $193,154.  Despite a rosier economic prognosis than its Atlantic neighbours, Halifax home prices remained flat year-over-year in the second quarter at $298,753. St. John's was the only Atlantic city in the Composite to report an aggregate price decline, with the price of a home decreasing 1.5 per cent year-over-year to $336,131 amid a regional economic downturn brought on by the fall in oil prices. Meanwhile, powered by agriculture and tourism, Prince Edward Island's economy is expected to grow slightly quicker than the national average according to most forecasters, although the residential real estate market has remained relatively flat, with the aggregate home price in Charlottetown rising 0.7 per cent year-over-year to $223,087 in the second quarter.

"Canada is not one homogeneous housing market, but rather a mosaic of many different real estate stories," stated Soper. "While low interest rates remain the primary driver of Canada's sustained real estate market expansion, home price trends are increasingly influenced by local factors, from the lift provided by wealthy immigrants to the drag felt by the depressed energy sector," explained Soper. "The two regions that have provided pleasant surprises have been the oil-impacted regions where home values have been remarkably resilient.  And in Quebec, where the broad-based recovery story continues, with Montreal homes experiencing healthy price increases for another consecutive quarter."

"Southern Ontario continues to see substantial year-over-year home price appreciation, with robust sales activity and price growth in both Toronto proper and in the region's other urban centres, with no immediate sign of slowing down," said Soper. "It is completely fair to describe the price increases we have experienced in the Toronto market as healthy; Vancouver is a different story altogether.  Canada's most expensive market is distancing itself from the rest of the country at such a rapid rate that housing affordability has become a major public policy issue."

"The quest for affordability in Vancouver seems to be influencing consumer housing type choices," continued Soper.  "Alongside skyrocketing prices of single-family homes, we have seen an uptick in the rate of price appreciation for condominiums over 1,000 square feet, when compared to smaller units in this market.  This may indicate that families being priced out of the single-family detached home market in Vancouver are looking upwards to condominiums. In the GTA, this trend has not yet taken hold, suggesting that buyers are still predominantly moving 'out' to surrounding regions, versus 'up', in search of relatively affordable housing options," concluded  Soper.

Aggregated regions and the Royal LePage National House Price Composite:  

National and Metropolitan Area Aggregates

Two-Storeys

Bungalows

Condominiums

Aggregate

Market

Province

Q2 2015

Q2 2016

Year-Over-Year % Change

Q2 2015

Q2 2016

Year-Over-Year % Change

Q2 2015

Q2 2016

Year-Over-Year % Change

Q2 2015

Q2 2016

Year-Over-Year % Change

53 City Composite


$559,557

$619,671

10.7%

$405,170

$437,121

7.9%

$334,254

$348,189

4.2%

$476,383

$520,223

9.2%

Greater Montreal Area

QC

$416,273

$437,378

5.1%

$276,764

$283,755

2.5%

$279,840

$283,710

1.4%

$332,921

$344,620

3.5%

Greater Toronto Area

ON

$691,827

$770,676

11.4%

$576,999

$638,479

10.7%

$357,867

$371,159

3.7%

$595,730

$656,365

10.2%

Greater Vancouver

BC

$1,143,380

$1,446,700

26.5%

$917,423

$1,179,130

28.5%

$450,720

$502,531

11.5%

$881,911

$1,098,599

24.6%

 

Royal LePage National House Price Composite

Two-Storeys

Bungalows

Condominiums

Aggregate

Market

Province

Q2 2015

Q2 2016

Year-Over-Year % Change

Q2 2015

Q2 2016

Year-Over-Year % Change

Q2 2015

Q2 2016

Year-Over-Year % Change

Q2 2015

Q2 2016

Year-Over-Year % Change

St. John's

NL

$381,983

$378,618

-0.9%

$315,195

$311,971

-1.0%

$309,982

$282,678

-8.8%

$341,117

$336,131

-1.5%

Charlottetown

PE

$246,349

$248,386

0.8%

$182,445

$184,371

1.1%




$221,590

$223,087

0.7%

Halifax

NS

$320,518

$320,996

0.1%

$243,782

$240,511

-1.3%

$289,211

$296,859

2.6%

$298,810

$298,753

0.0%

Fredericton

NB

$259,228

$267,618

3.2%

$198,789

$210,630

6.0%




$226,904

$235,425

3.8%

Moncton

NB

$190,067

$201,715

6.1%

$183,632

$178,336

-2.9%




$187,460

$193,154

3.0%

Saint John

NB

$221,386

$228,174

3.1%

$185,168

$180,506

-2.5%




$203,047

$204,877

0.9%

Gatineau

QC

$261,499

$276,219

5.6%

$230,089

$229,370

-0.3%

$221,261

$220,461

-0.4%

$244,179

$250,978

2.8%

Laval

QC

$397,100

$390,233

-1.7%

$285,396

$294,321

3.1%

$239,148

$240,644

0.6%

$317,453

$318,939

0.5%

Montreal Centre

QC

$517,678

$562,501

8.7%

$380,100

$385,025

1.3%

$325,627

$331,766

1.9%

$397,412

$416,953

4.9%

Montreal East

QC

$463,164

$491,831

6.2%

$313,864

$309,666

-1.3%

$269,990

$263,642

-2.4%

$359,395

$368,234

2.5%

Montreal West

QC

$418,364

$435,924

4.2%

$327,003

$327,342

0.1%

$255,324

$265,372

3.9%

$370,226

$382,670

3.4%

Montreal Northshore

QC

$346,506

$357,455

3.2%

$249,101

$257,617

3.4%

$208,251

$199,173

-4.4%

$276,107

$283,154

2.6%

Montreal Southshore

QC

$365,837

$383,308

4.8%

$266,560

$274,801

3.1%

$211,362

$228,375

8.0%

$300,717

$314,251

4.5%

Quebec City

QC

$325,435

$332,238

2.1%

$253,500

$265,285

4.6%

$228,204

$222,117

-2.7%

$261,040

$268,368

2.8%

Sherbrooke

QC

$264,098

$280,030

6.0%

$210,528

$211,249

0.3%




$232,982

$240,343

3.2%

Trois-Rivières

QC

$178,744

$195,302

9.3%

$164,120

$171,105

4.3%




$172,060

$183,709

6.8%

Ajax

ON

$506,753

$564,139

11.3%

$396,236

$456,202

15.1%

$251,447

$254,013

1.0%

$493,308

$549,382

11.4%

Belleville/Trenton

ON

$220,083

$241,537

9.7%

$239,168

$230,434

-3.7%




$228,166

$233,577

2.4%

Brampton

ON

$513,033

$570,368

11.2%

$431,007

$484,824

12.5%

$246,634

$262,571

6.5%

$494,178

$549,153

11.1%

Hamilton

ON

$391,822

$428,296

9.3%

$333,346

$370,866

11.3%

$238,660

$236,902

-0.7%

$372,840

$408,602

9.6%

Kingston

ON

$344,466

$330,990

-3.9%

$288,378

$302,476

4.9%




$313,524

$313,614

0.0%

Kitchener/Waterloo/Cambridge

ON

$350,032

$373,437

6.7%

$316,930

$324,563

2.4%

$209,144

$209,568

0.2%

$333,943

$352,551

5.6%

London

ON

$287,327

$318,062

10.7%

$230,996

$249,964

8.2%




$261,982

$290,797

11.0%

Markham

ON

$787,659

$892,059

13.3%

$803,512

$853,138

6.2%

$342,308

$360,095

5.2%

$734,343

$825,753

12.4%

Milton

ON

$560,048

$629,156

12.3%

$463,948

$515,986

11.2%

$298,767

$318,020

6.4%

$540,463

$605,917

12.1%

Mississauga

ON

$621,755

$665,011

7.0%

$530,849

$594,905

12.1%

$279,942

$286,588

2.4%

$544,791

$582,683

7.0%

Niagara/St.Catharines

ON

$285,585

$315,777

10.6%

$252,620

$260,029

2.9%




$269,893

$289,239

7.2%

Oakville

ON

$810,809

$898,667

10.8%

$636,973

$702,337

10.3%




$765,889

$844,314

10.2%

Oshawa

ON

$365,121

$427,264

17.0%

$324,869

$376,736

16.0%

$186,367

$205,424

10.2%

$350,902

$409,452

16.7%

Ottawa

ON

$407,047

$419,709

3.1%

$387,131

$388,897

0.5%

$310,251

$311,964

0.6%

$392,157

$401,288

2.3%

Pickering

ON

$540,381

$597,503

10.6%

$489,574

$549,683

12.3%

$304,077

$284,559

-6.4%

$519,004

$571,603

10.1%

Richmond Hill

ON

$883,305

$1,076,610

21.9%

$710,019

$886,592

24.9%

$323,257

$318,324

-1.5%

$818,032

$992,632

21.3%

Scarborough

ON

$601,542

$656,398

9.1%

$552,859

$629,673

13.9%

$257,737

$260,353

1.0%

$497,626

$544,772

9.5%

Toronto

ON

$882,679

$974,937

10.5%

$646,411

$698,194

8.0%

$390,870

$407,638

4.3%

$627,577

$680,096

8.4%

Vaughan

ON

$774,442

$865,078

11.7%

$675,900

$646,830

-4.3%

$355,292

$364,965

2.7%

$709,124

$780,699

10.1%

Whitby

ON

$477,297

$556,822

16.7%

$448,988

$538,104

19.8%

$265,136

$307,981

16.2%

$467,409

$547,304

17.1%

Windsor

ON

$170,264

$187,127

9.9%

$170,183

$185,854

9.2%

$132,614

$147,012

10.9%

$167,603

$183,947

9.8%

Winnipeg

MB

$303,455

$314,589

3.7%

$265,031

$267,044

0.8%

$215,338

$206,854

-3.9%

$279,769

$285,358

2.0%

Regina

SK

$391,895

$385,225

-1.7%

$298,226

$298,004

-0.1%

$283,685

$249,345

-12.1%

$329,093

$323,612

-1.7%

Saskatoon

SK

$417,180

$421,214

1.0%

$363,411

$366,030

0.7%

$248,225

$224,525

-9.5%

$370,691

$370,125

-0.2%

Calgary

AB

$505,949

$498,073

-1.6%

$465,876

$453,952

-2.6%

$302,491

$298,309

-1.4%

$463,065

$454,790

-1.8%

Edmonton

AB

$437,601

$435,922

-0.4%

$371,226

$356,443

-4.0%

$238,189

$243,383

2.2%

$382,089

$377,337

-1.2%

Red Deer

AB

$379,396

$406,045

7.0%

$352,141

$328,148

-6.8%




$359,117

$357,928

-0.3%

Burnaby

BC

$1,107,576

$1,407,401

27.1%

$993,980

$1,309,181

31.7%

$411,003

$422,177

2.7%

$779,361

$959,659

23.1%

Coquitlam

BC

$880,033

$1,106,541

25.7%

$740,472

$906,141

22.4%

$330,039

$335,690

1.7%

$740,798

$910,282

22.9%

Kelowna

BC

$553,888

$585,254

5.7%

$465,860

$473,595

1.7%

$306,845

$319,959

4.3%

$485,335

$505,309

4.1%

Langley

BC

$628,552

$758,646

20.7%

$534,068

$583,763

9.3%

$212,463

$224,496

5.7%

$582,434

$683,007

17.3%

North Vancouver

BC

$1,269,322

$1,512,966

19.2%

$1,108,779

$1,386,556

25.1%

$424,725

$437,313

3.0%

$1,015,054

$1,213,737

19.6%

Richmond

BC

$993,398

$1,313,836

32.3%

$902,474

$1,190,816

32.0%

$376,849

$417,613

10.8%

$757,874

$972,443

28.3%

Surrey

BC

$681,734

$796,544

16.8%

$546,463

$680,609

24.5%

$232,258

$238,124

2.5%

$605,599

$710,121

17.3%

Vancouver

BC

$1,803,408

$2,357,786

30.7%

$1,007,565

$1,340,872

33.1%

$524,751

$605,450

15.4%

$1,043,236

$1,330,531

27.5%

Victoria

BC

$617,079

$736,856

19.4%

$504,796

$500,279

-0.9%

$379,776

$360,067

-5.2%

$484,832

$510,470

5.3%

West Vancouver

BC

$2,691,798

$3,516,748

30.6%

$2,108,395

$2,697,621

27.9%

$955,482

$1,152,317

20.6%

$2,385,815

$3,093,776

29.7%

*Data presented in the tables above may not match same period data reported previously due to subsequent market updates

Royal LePage 2016 Market Survey Forecast6 Update:

Average House Price % Change

City

Province

2016/2015
% Change

2016 Forecast Price7

2015 Price

Canada

12.4%

$563,000

$500,688

Halifax

NS

1.0%

$308,700

$305,688

Greater Montreal Area

QC

3.0%

$350,400

$340,207

Ottawa

ON

2.5%

$400,700

$390,948

Greater Toronto Area

ON

14.9%

$718,000

$624,923

Winnipeg

MB

2.6%

$300,000

$292,316

Regina

SK

2.0%

$327,600

$321,139

Calgary

AB

1.0%

$464,400

$459,809

Edmonton

AB

-1.0%

$376,700

$380,502

Greater Vancouver

BC

27.0%

$1,206,000

$949,468

 

About the Royal LePage House Price Survey
The Royal LePage House Price Survey provides information on the three most common types of housing in Canada, in 53 of the nation's largest real estate markets. Housing values in the House Price Survey are based on the Royal LePage National House Price Composite, produced quarterly through the use of company data in addition to data and analytics from its sister company, Brookfield RPS, 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 over 16,500 real estate professionals in more than 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 Brookfield Real Estate Services Inc. company, a TSX-listed corporation trading under the symbol TSX:BRE.

For more information visit: www.royallepage.ca.

_______________________________________
1
 Powered by Brookfield RPS 
2 Aggregate prices are calculated via a weighted average of the median values of homes for reported property types in the regions surveyed
3 "Foreign buyers" are defined as buyers who have lived outside of Canada for at least six months over the last year.
4 Findings are the result of a survey of 482 Royal LePage real estate advisors working within the Greater Vancouver and Greater Toronto Area  (161 and 321, respectively) between the dates of July 1, 2016 and July 8, 2016.
5 Conference Board of Canada, Provincial Outlook: Spring 2016. Available: http://www.conferenceboard.ca/e-library/abstract.aspx?did=8062 
6 The Royal LePage Market Survey Forecast provides projections for aggregate national and regional house prices at year-end (fourth quarter)
7 Based on the aggregate price, which is calculated via a weighted average of the median values of homes for reported property types in the regions surveyed.

SOURCE Royal LePage Real Estate Services



For further information: Gwen McGuire, Kaiser Lachance Communications, 416-948-6500, gwen.mcguire@kaiserlachance.com


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890