Royal LePage Market Survey Forecast
Okay, so it is not always the most exciting of reports but the Royal LePage Market Survey Forecast, released last week, is really helpful information for anyone considering a change in their living arrangements in the next 12 months. Their data suggesting an increase in Canadian home prices of only 4.9% by the end of 2018 to $661,919, increases contained thanks to the new OSFI stress test which will take place January 1st. “If the regulations, particularly the stress test, had not been implemented, I believe we would be seeing double-digit home price increases in the GTA in 2018.” Said Royal LePage chief executive officer Phil Soper.
With homeowners potentially failing the test, price growth is expected to stagnate for the first half of 2018. Diminished affordability for entry-level properties is expected to create a surge in the condo market.
Policies designed to help runaway markets will affect the rest of the country but will only help those hot markets short term. “Insufficient housing supply in Canada’s largest cities will begin to drive significant price increases to higher than normal levels once the market adjusts to the new stress test,” said Soper “Aggressive home price inflation is still more of a threat today than the risk of a market crash in Toronto or Vancouver.”
Low, inventory levels are expected to continue to define the market in the GTA. Immigration, and demand from millennials will continue to outpace supply.
Royal LePage’s research shows that millennials desire to own their own homes as much as their parents before them. 87% see real estate as a good financial investment. “There will be those who are priced out of the market altogether.” Says Soper.
Canada’s economy is expected to expand by 2.1% in 2018, the real estate industry accounted for 13% of the GDP in 2016. “When people are confident about their jobs and optimistic about the health of their country and their city, they will invest in a home,” Soper concluded. “At projected levels of demand, Canadian housing is poised for growth for years to come.”
Home prices in the GTA are expected to have the highest increase of any Canadian city, at 6.8% in 2018, rising to $901,392. Relative to recent years, 2018 is expected to be a good year for buyers. While the condo market should continue to increase, buyers looking at detached properties in the first quarter will hopefully have a much greater selection.