Nationally, home prices increased 1.5% on a quarterly basis in Q2 despite activity slowdown in major markets.
Despite a strong first quarter for sales, Canada’s spring housing market experienced a subdued second quarter in 2024. The highly anticipated rate cut by the Bank of Canada in June generated significant buzz but did not lead to a noticeable return of homebuyers. This cautious behavior from buyers, coupled with rising inventory levels, has created more balanced market conditions for houses for sale.
Royal LePage® forecasts that the aggregate price of a home in Canada will rise by 9.0% in Q4 of 2024 compared to the same quarter last year. Nationally, home prices are expected to continue a moderate upward trend throughout the second half of the year, making it an interesting time for those searching for real estate for sale or houses for sale near me.
“Canada’s housing market is struggling to find a consistent rhythm, as the last three months clearly demonstrated,”
-- said Phil Soper, president and CEO, Royal LePage.
“Nationally, home prices rose while the number of properties bought and sold sagged; an unusual dynamic. The silver lining: inventory levels in many regions have climbed materially. This is the closest we’ve been to a balanced market in several years.
“This trend dominates activity in two of the country’s largest and most expensive markets, the greater regions of Toronto and Vancouver, where sales are down yet prices remain sticky,” Soper continued. “There are exceptions. In the prairie provinces and Quebec, low supply and tight competition persist.”
Q2 Reports Modest Uptick in Home Prices
According to the Royal LePage House Price Survey, the aggregate price of a home in Canada increased 1.9% year over year to $824,300 in the second quarter of 2024. On a quarter-over-quarter basis, the national aggregate home price increased 1.5%, despite a slowdown in activity in the country’s most expensive markets.
When broken out by housing type:
The national median price of a single-family detached home increased 2.2% year over year to $860,600,
The median price of a condominium increased 1.6% year over year to $596,500.
On a quarter-over-quarter basis, the median price of a single-family detached home increased 1.8%, while the median price of a condominium increased 0.8%.
Sustained high interest rates run risk of buyer rush
Over the past two years, home prices in the national housing market have fluctuated between modest declines and increases, with some regional variations, due to the impact of higher interest rates. As the Bank of Canada carefully balances lowering the key lending rate with controlling inflation, some segments of Canada’s housing market have stalled.
“Canada’s housing market faces pent-up demand after two stifling years of high borrowing costs. While inflation control is crucial, persistently high rates are increasing the risk of a surge in demand when buyers inevitably return. New household formation and immigration keep fueling the need for housing, and a sudden release could create much market instability. This highlights the need for a more nuanced approach that balances inflation control with economic vitality,” added Soper.
Increased borrowing costs hamper new supply creation
Elevated borrowing rates are not only dampening housing market activity but also stifling the construction of new homes. Builders, who rely heavily on lending, are finding it increasingly difficult to finance new projects, exacerbating the country’s shortage of housing at a time when our population continues to grow.
Second quarter press release highlights:
Toronto and Vancouver report slower-than-usual market activity this spring as inventory builds, while demand continues to outpace supply in prairie provinces and Quebec
Quebec City records highest year-over-year aggregate price increase (10.4%) in Q2 among report’s major regions
Royal LePage maintains national year-end forecast with prices expected to increase 9.0% in Q4 2024 over the same period last year
According to a Royal LePage survey, conducted by Leger2 earlier this year, 51% of sidelined homebuyers said they would resume their search if interest rates reversed
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