Canadian home prices will grow modestly next year after a weak 2018, but the Vancouver housing market is expected to continue to struggle, according to forecasts from two of Canada’s largest residential realty firms.
Royal LePage is anticipating 1.2-per-cent growth in the national median sales price in 2019, while Re/Max predicts average price gains of 1.7 per cent next year.
While the price increases are modest, they would both be a significant improvement over 2018, which turned out to be a slow year for sales in many major markets. As of the end of October, the number of homes sold nationally was down 10 per cent compared with the first 10 months of 2017, while the average national sales price was down 3.5 per cent over the 10-month period, according to the Canadian Real Estate Association.
Royal LePage predicts higher prices in most major markets in 2019. Montreal will lead the country with 3-per-cent price growth next year, followed by Ottawa with 2.5-per-cent price growth, its forecast shows. Prices in the Greater Toronto Area are expected to climb 1.3 per cent, while prices in Greater Vancouver are forecast to remain relatively flat, climbing just 0.6 per cent.
However, prices in Alberta and Saskatchewan are expected to fall in 2019 as oil prices remain low. Royal LePage predicts home prices will fall 4.7 per cent in Regina, 2.3 per cent in Calgary and 1.9 per cent in Edmonton.
Royal LePage chief executive officer Phil Soper said the Canadian housing market will remain in the “correctional cycle” that began in 2018 as sales dropped because of higher interest rates and tougher new mortgage rules.
“Markets aren’t perfect. They overshoot and then they must correct,” Mr. Soper said in a statement.
Re/Max anticipates even greater weakness in Vancouver, predicting a 3-per-cent price drop next year as sales continue to stall in Canada’s most expensive city. Re/Max said foreign-buyer activity is falling in Vancouver, especially in the condo sector, opening up more opportunity for local buyers.
But with sales down 30 per cent in 2018, domestic buyers do not appear to be leaping into the market, and prices are expected to fall further next year as demand weakens.
Only Edmonton is expected to see significantly weaker prices than Vancouver, according to Re/Max, with prices forecast to drop 5 per cent. However, Edmonton’s luxury housing market is thriving, with cannabis investors and migrant speculators driving demand for higher-end homes.
Calgary is expected to be flat next year, while prices in Toronto are expected to climb 2 per cent in 2019, Re/Max said. Condominium sales will fuel Toronto’s market as buyers continue to favour the relatively more affordable market segment, Re/Max said.
Chris Alexander, regional director for Re/Max in Ontario and Atlantic Canada, said the new mortgage stress-test rules and higher interest rates are hindering buyers, even in traditionally more affordable regions such as Durham, east of Toronto.
“This is particularly true for the first-time buyers and single millennials,” he said.
Re/Max predicts the biggest price gains will occur in smaller cities, farther from the major centres. In London, Ont., for example, prices are expected to climb 17 per cent next year. Chilliwack, B.C., and Windsor, Ont., are both expected to see prices climb 13 per cent, and Charlottetown will see an 11-per-cent price increase next year.
Janet McFarland