Home prices to turn negative for 2022: Royal LePage
Prices declined 4.9% in third quarter, with the average price falling to $774,900 from $815,000 in the second quarter
Article content
Canadian home prices decreased by 4.9 per cent on a quarterly basis in the third quarter and are now expected to end the year below 2021 levels, according to a Royal LePage House Price Survey released Thursday.
While aggregate home prices rose 3.3 per cent year over year, the pace of growth was significantly slower than the 21.4 per cent hike reported in the third quarter of 2021.
The quarter-over-quarter decline was the second consecutive such drop, and pushed aggregate home prices down to $774,900 from $815,000 in the second quarter.
Royal LePage’s forecast for the fourth quarter, meanwhile, was revised downward. If the trends persist, the national aggregate home price is now expected to decline by 0.5 per cent on a year-over-year basis in the fourth quarter. The previous forecast, made in the second quarter of this year, was for a national aggregate home price increase of five per cent in the final quarter of the year.
“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, chief executive 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.”
The survey found that 58 of the 62 regional markets studied posted quarterly price declines in the third quarter. Those included the Greater Montreal Area, where prices fell for the first time in more than five years. St. John’s, Charlottetown, Montreal South Shore and Saskatoon were the only markets in which prices increased.
On a year-over-year basis, median prices also increased. Nationally, the median price of a home increased two per cent to $806,100 in the third quarter of 2022 from $790,000 in the third quarter of 2021. Median condominium prices increased 6.1 per cent to $566,100 during the same period.
Aggregate home prices remained elevated against both 2020 and 2019 levels, by 25.4 per cent and 21.5 per cent, respectively, in part due to continued shortages in housing supply.
“Home sales volumes have fallen in the face of economic uncertainty and rising rates, but so too have the number of properties available to purchase,” Soper said in the report. “With demand and supply falling in tandem, there is limited downward pressure on prices. Canadian home values should end the year well above pre-pandemic levels, retaining much of the gains made during the real estate boom of 2020 and 2021.”
Karen Yolevski, COO of Royal LePage Real Estate Services Ltd., said prices have not decreased as much as many had expected, given the pace of interest rate increases.
“In the last couple of months, the GTA has seen prices stabilize again,” Yolevski said in an interview. “Prices even went up a little bit.”
The aggregate price of a home in the GTA fell by 5.9 per cent on a quarterly basis, but increased by 2.1 per cent over 2021.
Greater Montreal prices were down by 5.3 per cent on a quarterly basis, but up 7.3 per cent for the year.
Even though quarterly prices declined, nearly one in five Canadians (19 per cent) has postponed or deprioritized homebuying this year, a recent Royal LePage survey found.
It cited the increased cost of living, higher interest rates and rising inflation as contributing factors.
Among Canadians aged 18 to 34, the figure rose to 29 per cent. Overall, of those who said they have modified their plans, 40 per cent said they still plan to buy at a later date.
• Email: shcampbell@postmedia.com
Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information.