Yahoo Finance Why Royal LePage thinks home prices will keep rising in 2021
Knowing the right time to buy a home is tricky in the best of times, especially considering how forecasts for Canada’s real estate market have been all over the map.
Last week Fitch Ratings Agency said housing prices will fall up to 5 per cent in 2021 due to lingering economic effects of COVID-19, but today Royal LePage predicts strength this year will spill over into 2021 with a 5.5 per cent year-over-year rise in the aggregate price of a home to $746,1000.
“The leading indicators we analyze are pointing to a market that favours property sellers in the all-important spring of 2021,” said Phil Soper, Royal LePage president and CEO, in the report.
“Across the country, a large number of hopeful buyers intent on improving their housing situation were not able to find the home they were looking for this year, as the inventory of properties for sale came nowhere near to meeting surging demand.”
Soper says the imbalance will continue as long as interest rates remain at record lows, which is something the Bank of Canada says will be the case until at least 2023.
Royal LePage says price increases will vary by region. Ottawa is expected to lead the way with an 11 per cent increase, driven by growth in government and tech sector jobs. Vancouver, Canada’s priciest city, is expected to get even more expensive, with a 9 per cent increase. Halifax and Greater Montreal prices are forecast to rise 7.5 per cent and 6.0 per cent, respectively.
The Greater Toronto Area (GTA) is forecast to rise 5.75 per cent, but just as gains vary by region, they also vary based on housing type. Nationally, the median price of a two-storey detached house is projected to increase by 6 per cent to $890,100 and 2.25 per cent to $522,700 for condos.
That gap is even more pronounced in the GTA. Royal LePage expects two story home prices to rise 7.5 per cent to $1,185,800, but a more modest 0.5 per cent increase to $600,800 for condos. Royal LePage expects demand for condos in the core to remain soft relative to detached homes outside of the city until international students and new immigrants return in the second half of 2021.
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.
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