Q2 price gain suggests sustainable housing market recovery

by Steve Randall11 Jul 2019

There was a modest price gain for the Canadian housing market in the second quarter of 2019.

Royal LePage says its National House Price Composite suggests sustainable recovery for the market with a 1.1% rise in Q2 2019 to $621,696 and a 0.4% year-over-year rise predicted by the end of the year.

By property type, the median price for:

  • a two-storey home rose 1% year-over-year to $727,165;
  • a bungalow dipped 0.4% year-over-year to $516,048;
  • a condo gained 3.8% year-over-year to $452,451.

"We now have evidence of a sustained market recovery in some of the nation's largest markets, and signs of a price floor in other regions hit hard by the eighteen month-old housing correction," said Phil Soper, president and CEO, Royal LePage.

He added that despite the national picture, a significant number of home buyers remaining on the sidelines in the West, depressing sales volumes and causing prices to sag.

“Buoyed by supportive economic conditions, many stubborn homeowners in B.C. and Alberta remain unwilling to let their precious real estate go for less than what they perceive as fair value, which has gone a long way to protecting existing home values," added Soper.

Months ahead

For the rest of 2019, Royal LePage forecasts that the GTA (1.4%) and Greater Montreal Area (4.5%) will to continue to drive national home price gains, while Ottawa is expected to outpace the GTA with a projected price increase of 1.6 per cent by year-end.

Weakness is set to remain in the Greater Vancouver Area with the aggregate home price forecast to decrease by 5.5% compared to end of year 2018.

Other Western cities are also expected to decline, with home prices in Calgary, Edmonton, and Regina expected to decrease 3.6%, 3%, and 4.9% respectively.

Government initiatives

Royal LePage is not expecting the housing affordability measures announced in the federal budget – including RRSP withdrawal limit and the First-Time Home Buyer Incentive - to have much impact on house prices.

"Overall, the new government programs should be supportive of the housing market, but their impact on home price appreciation will likely be minor - and that's a good thing," said Soper. "Heavy-handed policy intervention can cause artificial spikes or drops in home prices. What it doesn't do is change the need for shelter; it just stokes price inflation and housing shortages, or market slumps and dangerous pent-up demand."

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