According to Royal LePage’s December Market Survey Forecast, home prices in Canada will return to their pandemic peak late in 2024. Royal LePage predicts minor interest rate cuts will fuel national aggregate home price increase of 5.5% year over year in fourth quarter of 2024
Nationally, single-family detached and condominium prices are forecasted to increase 6.0% and 5.0%, respectively, year over year in Q4 of 2024 with the greatest increases coming in second half of the year.
Royal LePage’s forecast is based on expectation that the Bank of Canada will hold rates steady through first half of next year, and begin modestly easing rates in late summer or fall.
After years of unprecedented irregularity, Canadians may see the real estate market return closer to normal in 2024. According to the Market Survey Forecast, the aggregateprice of a home in Canada is set to increase 5.5 per cent year over year to $843,684 in the fourth quarter of 2024, with the median price of a single-family detached property and condominium projected to increase 6.0 per cent and 5.0 to $879,164 and $616,140, respectively.
“Looking ahead, we see 2024 as an important tipping point for the national economy as the majority of Canadians acknowledge that the ultra-low interest rate era is dead and gone,” said Phil Soper, president and CEO, Royal LePage. “We believe that the ‘great adjustment’ to tolerable, mid-single-digit borrowing costs will have a firm grip on our collective consciousness after only modest rate cuts by the Bank of Canada.”
Home prices are expected to rise next year in all major markets across the country, with Calgary forecast to see the greatest gains. Throughout the second half of 2023, while prices have been declining in other cities, the Calgary real estate market has bucked the trend continuing on an upward price trajectory.
Royal LePage’s forecast is based on the prediction that the Bank of Canada has concluded its interest rate hike campaign and that the key lending rate will hold steady at five per cent through the first half of 2024. The central bank is expected to start making modest cuts in late summer or fall of next year. Meanwhile, several major financial institutions have already begun offering discounts on fixed-rate mortgages.
“For the last year, many Canadians have been fixated on the idea of interest rates needing to come down significantly before they can afford to enter or re-enter the housing market. Acceptance that a mortgage rate of four to five per cent is the new normal should untether pent-up demand as first-time buyers, flush with savings collected during the extended down market in housing, regain the confidence to go home shopping. And, with the return of first-timer demand, we expect families who have put off upgrading their homes to begin to list their properties in much greater numbers,” said Soper.
You can read the full report here.
