14 Oct Royal LePage’s Q3 2022 National Home Price Forecast
Royal LePage’s Q3 2022 Home Price Update and Market Forecast
2022 national home price forecast reduced to end year slightly below 2021 levels, following quarterly declines across Canada in Q3
From the national home price forecast Canadian home prices are projected to end the year modestly lower than where they were during the final months of 2021, undoing the price growth seen earlier this year. Royal LePage is forecasting that the aggregate price of a home in Canada will decrease 0.5% in the fourth quarter of 2022, compared to the same quarter last year, due to a continued softening of home prices in a majority of markets across the country in the third quarter (94% of regions in the report).
“September did not bring the typical seasonal lift in the number of homes trading hands in this country, a clear indication that our housing market continues to adjust to higher borrowing costs,” said Phil Soper, president and CEO of Royal LePage. “Home prices follow sales volume trends, which means we will see further softening in the final months of the year. Our revised outlook has national prices at just below where we ended 2021, erasing the gains made in the first quarter of 2022.”
According to the Royal LePage House Price Survey, the aggregate price of a home in Canada increased 3.3% year-over-year to $774,900 in the third quarter of 2022. However, on a quarterly basis, that figure decreased 4.9%; the second consecutive quarterly decline recorded. When broken out by housing type, the national median price of a single-family detached home rose 2.0% year-over-year to $806,100, while the median price of a condominium increased 6.1% year-over-year to $566,100.
With so many would-be buyers waiting on the sidelines, sales activity has weakened across the country.
“While sales volumes are well off the pandemic-fueled peak, many buyers remain active in today’s market. Some are motivated to transact before their locked-in mortgage pre-approval rates expire. Others are encouraged by a rare drop in home prices, the lack of bidding wars and the ability to include conditions in purchase offers,” added Soper. “At the first indication that interest rates have ended their climb and home prices have stabilized, I would expect a sharp increase in those entering the market as the need for housing has not diminished one bit. And regrettably, Canada continues to suffer from a severe shortage of housing supply.”
Third quarter press release highlights:
- National aggregate home price for the final quarter of the year forecast at -0.5%
- National aggregate home price increased 3.3% year-over-year in third quarter of 2022; decreased 4.9% quarter-over-quarter
- Prices remain well above pre-pandemic levels; Canada’s national aggregate home price increased 25.4% in Q3 over the same quarter in 2020, and 21.5% over the same quarter in 2019
- 58 of the report’s 62 regional markets posted quarterly aggregate home price declines in Q3
- Prices decline on a quarterly basis in Greater Montreal Area for the first time in more than five years as market activity drops, following trend set in greater regions of Toronto and Vancouver in Q2
- Major markets in Atlantic Canada and the Prairies show modest quarterly price declines in Q3; Calgary and Edmonton markets faring better than other major cities
The aggregate price of a home in Ottawa increased 2.7 per cent year-over-year to $744,500 in the third quarter of 2022. On a quarterly basis, the aggregate price of a home in Ottawa decreased 7.0 per cent; the second consecutive quarterly decline recorded.
Broken out by housing type, the median price of a single-family detached home remained flat, increasing by 0.2 per cent year-over-year to $858,900, while the median price of a condominium decreased 5.4 per cent to $392,300 during the same period.
“Despite softening home prices over the summer, Ottawa’s fall real estate market is trending towards more stable conditions as new inventory becomes available. We continue to see strong buyer demand in the region – even if lower than last year’s historical highs – and not enough supply to fully shift to a balanced market,” said Jason Ralph, broker of record, Royal LePage Team Realty. “Despite rising interest rates, many buyers are still keen to make a purchase this year. And, without a significant boost in inventory, it is unlikely we will see a full return to a balanced market.”
Ralph noted that interest rate hikes and inflation have eased competition. However, properties in the most desirable neighbourhoods, if priced properly, can still produce multiple-offer scenarios.
“Although demand remains strong in parts of the region, buyers today are able to be more selective with their purchases and have the opportunity to place conditions in their offers. Those who are in a position to buy feel the pressure to transact before lending rates rise any further.”
Ralph expects healthy market activity in Ottawa for the remainder of the year and anticipates a shift back to pre-pandemic seasonal trends in 2023, as low supply continues to be a challenge.
Royal LePage is forecasting that the aggregate price of a home in Ottawa will increase 0.5 per cent in the fourth quarter of 2022, compared to the same quarter last year. The previous forecast has been revised downward to reflect current market conditions.
Read Royal LePage’s third quarter release for national and regional insights.
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