Following several years of rising prices – sharply rising in some cases – home price growth will continue to ease in 2019 according to a new report from Royal LePage.
"Markets aren't perfect. They overshoot and then they must correct," said Phil Soper, President and CEO, Royal LePage. "The Canadian housing market in 2019 will remain in the correctional cycle that began in 2018, where price gains and sales activity are below the long term norm, after a few years of uncomfortably high major market price increases."
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The two hottest markets will see among the slowest appreciation in the coming year with Greater Vancouver prices rising just 0.6% and the Greater Toronto Area gaining 1.3%.
"Compared to the record pace of home appreciation seen in 2016 and 2017, the GTA housing market is now positioned for much healthier and sustainable growth in future years," said Chris Slightham, broker and owner, Royal LePage Signature Realty. "Potential home buyers who were shut out of the market have an opportunity to catch up and we are expecting increased sales activity this spring compared to last year."
Montreal to lead price gains
The Greater Montreal Area will lead price growth in 2019 with 3% while Ottawa (2.5%), Halifax (1.6%), and Winnipeg (1.3%) will also see increases.
“With healthy price increases projected in 2019, we're forecasting the housing market in the Greater Montreal Area to outperform other Canadian urban centres," said Dominic St-Pierre, Vice President and General Manager, Royal LePage, for the Quebec region.
"While previous interest rate hikes by the Bank of Canada and the tightened 2018 OSFI mortgage rules spared the province's real estate market in 2018, we may see some effects in 2019 as more homeowners renew their mortgage loans," said St-Pierre. "On the upside, this should help stabilize inventory. We anticipate a 2.0 per cent increase in sales in the Greater Montreal Area."
Painful year for Regina
However, prices will fall by 1.9% in Edmonton, 2.3% in Calgary and 4.7% in Regina.
"The challenges that plagued the Regina real estate market in 2018 may have 'touched the bottom' on our localized recession. Provincial GDP and hiring trends indicate that we may see a rebound by the second quarter of 2019," said Mike Duggleby, broker and owner, Royal LePage Regina Realty. "Those looking to buy are finding excellent selection, reduced competition from other buyers and affordable prices."
Overall, Canadian home prices are forecast to gain 1.2% in 2019 and Phil Soper says there are two factors influencing the firm’s forecast that deserve special consideration.
“Firstly, home prices are appreciating, albeit at a snail's pace. Secondly, the Canadian market is supported by strong economic fundamentals, including a robust rate of new household formation and excellent employment growth,” he said. “
However, the future may be too bright says Soper. As more people are employed and looking for a roof over their heads, supply issues will weigh on markets.
“More than an affordable housing problem, we will once again be facing an overall housing supply crisis," said Soper.
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