Canadian Home Prices Expected to Surge Nearly 10%
A new report by realty firm Royal LePage forecasts a significant uptick in Canadian home prices, projecting a nine percent increase in aggregate home prices by the fourth quarter of 2024 compared to the end of 2023.
According to Royal LePage CEO Philip Soper, two primary factors are driving this surge in prices. Firstly, there is a severe shortage of housing across the country. Secondly, there is anticipated demand from sidelined homebuyers who could enter the market if the Bank of Canada decides to lower its key interest rate, which currently stands at five percent.
Soper emphasized that a decrease in the bank rate, leading to cheaper mortgages, is likely to fuel demand in the housing market, subsequently pushing prices higher. Many Canadians who have been waiting to purchase a home are eagerly watching for any indication of a drop in interest rates, which would prompt them to enter the market.
The Canadian Real Estate Association (CREA) echoed similar sentiments, stating that interest rates will continue to be a significant factor affecting the housing market in 2024 and beyond. CREA’s latest housing forecast highlights the impact of interest rates on market activity, noting a slight uptick in home sales in March.
While the MLS home price index remained mostly unchanged month-over-month in March, CREA observed a surge in new supply around mid-March, leading to increased listings and a subsequent boost in sales toward the end of the month.
However, experts like John Pasalis, president of Toronto brokerage Realosophy Realty, caution that the anticipated lower interest rates may not necessarily benefit homebuyers as expected. Pasalis suggests that despite the potential for rate cuts, other market dynamics could influence the overall housing landscape.
As the housing market continues to evolve, analysts are closely monitoring indicators such as interest rates, supply, and demand to gauge the trajectory of Canadian home prices in the coming months.
