Canada’s housing market is snapping back after one of the most significant corrections since the financial crisis. According to Royal LePage, the national average price of a home rose 4 per cent in the fourth quarter of 2018 compared to the previous year to $631,223.
Royal LePage predicts home prices will rise a modest 1.2 per cent in 2019, a far cry from the through-the-roof increases of 2016 and 2017. Condominiums were the strongest part of the market. The average price rose 7.2 per cent to $447,915.
“The invisible hand that guides our complex economy hit the real estate reset button in 2018 and that is a good thing,” says Phil Soper, president and CEO of Royal LePage, in a news release.
“Major market home price inflation through much of the decade had led to dangerous overheating in our most populous regions. Government regulatory intervention and rising interest rates, when combined with property price overshooting, triggered the correctional cycle we find ourselves working through today.”
The biggest price jumps were in the Greater Montreal Area, where the average price rose slightly more than the national average to $407,230.
The City of Toronto was strong at 8.8 per cent. But weakness in surrounding areas brought the broader Greater Toronto Area area down to 3.4 per cent.
A similar story played out in the Greater Vancouver Area. Home price appreciation in Vancouver was a more subdued 2.1 per cent, as appreciation in surrounding areas also slowed.
Weak oil prices didn’t put a damper on most of Alberta’s real estate market. Prices in all of its cities went up, except for a 9.4 per cent decline in Fort McMurray.
Soper does not expect oil prices or a slowing economy to lead to home price declines.
“While some economists are adjusting their forecast for the economy as a whole, Canada’s real estate market is beginning to emerge from the correction that began a year ago. The national real estate market is stable and should see modest price gains by the end of 2019,” says Soper.