The latest Royal LePage House Price Survey has been released, providing essential insights and details about the current state of the Canadian housing market. The report is useful for real estate professionals’ reference; it highlights regional variances and economic complexities.

The Canadian real estate market continues to experience a prolonged catch-up period, with buyers remaining hesitant despite recent interest rate cuts. The national aggregate home price rose by 1.9% year-over-year in Q2 2024, reaching $824,300. Quarter-over-quarter, the increase was 1.5%.

Regional Highlights

However, there are significant regional variances, according to the report. There are areas where market activity stayed sluggish, particularly in Toronto and Vancouver, where inventory levels are building up; on the other hand, in the prairies and Quebec, demand continues to outpace supply and there is tight competition.

Greater Toronto Area

The GTA saw a modest year-over-year price increase of 0.9% to $1,190,600 in Q2 2024. Sales activity was unseasonably low this spring, with almost all price appreciation occurring in the first quarter. New and active listings have surged, reaching the highest levels in over a decade, providing potential opportunities for buyers when they re-enter the market.

Greater Vancouver

The aggregate price of a home in Greater Vancouver increased by 3.9% year-over-year to $1,251,200 in Q2 2024. Despite the June interest rate cut, market activity has not significantly picked up, with buyers remaining cautious. Inventory levels have continued to grow, giving buyers more options and balancing the market.

Quebec City

Quebec City recorded the highest year-over-year aggregate price increase of the major regions, at 10.4%. The aggregate price of a home reached $387,000 in Q2 2024. The market is showing strong demand, limited supply, and affordable home values compared to other regions.

Calgary

Calgary experienced a robust year-over-year price increase of 7.9% to $694,000 in Q2 2024. Inventory levels are still struggling to meet demand.

Ottawa

Ottawa’s aggregate home price rose by 2.1% year-over-year to $777,400 in Q2 2024. The market remains relatively quiet, with many buyers and sellers taking a cautious approach due to high borrowing costs.

Economic Factors Influencing the Market

The Bank of Canada’s recent 25-basis-point cut to the overnight lending rate, reducing it from 5.0% to 4.75%, has not yet boosted significant market activity. Additionally, a survey conducted by Royal LePage earlier this year revealed that 51% of sidelined homebuyers would resume their search if interest rates reversed, but only 10% would be motivated by a 25-basis-point drop, suggesting that more significant cuts are necessary to drive market activity.

In addition to high borrowing costs discouraging homebuyers, the stifled new home construction is affecting the market. Builders, who rely heavily on lending, are finding it challenging to finance new projects, exacerbating the housing shortage. The Canada Mortgage and Housing Corporation (CMHC) reported a month-over-month increase in national housing starts in May, but the rate of new construction remains well below what is needed to meet demand and make housing more affordable.

Gradual interest rate reductions could help both buyers and builders. Lower rates would incentivize developers to launch new projects, providing much-needed affordable options for first-time buyers, growing families, and downsizing retirees. In the meantime, real estate professionals may need to be creative in finding suitable properties for clients that meet their budgets.

Forecast

Royal LePage is maintaining its national year-end forecast, expecting home prices to increase by 9.0% in Q4 2024 compared to the same period last year. The market is projected to see moderate price appreciation throughout the second half of the year, with regional variances continuing to play a significant role.

Greater Toronto Area: Prices are forecast to increase by 10.0% in Q4 2024.
Greater Montreal Area: Prices are expected to rise by 8.5%.
Greater Vancouver: Prices are projected to increase by 5.5%.
Ottawa: Prices are forecast to rise by 4.5%.
Quebec City: Prices are expected to increase by 9.5%.
Calgary: Prices are projected to rise by 8.0%.

The Canadian real estate market remains in a state of flux, influenced by economic factors such as interest rates and inflation. While some regions are experiencing robust price growth, others are seeing a slowdown in activity. Real estate professionals must stay informed and adapt to these changing conditions to provide clients with the best possible advice and opportunities.

For detailed insights and data specific to municipalities, visit the Royal LePage website to access the full comprehensive report and additional regional releases.