Real estate brokerage giant Royal LePage has released its recap of last year’s market growth, as well as its 2017 forecast for markets across the country. According to the report, uneven conditions between “have” and “have-not” real estate regions will be less extreme this year – an end to what Royal LePage President and CEO Phil Soper refers to as “feast and famine”.
“The disparity in home price appreciation between Canadian regions has never been greater than that seen in 2016, with rates ranging from double-digit extremes in some cities to negative growth in others,” he states. “The economic drama put real estate at the forefront of everybody’s mind last year, from the Prime Minister to the recent grad.”
Market growth in 2016 was mainly driven by the usual suspects – Vancouver and Toronto – pushing the Royal LePage National House Price Composite (which includes detached homes, townhouses and condos) up 13% to $558,153 – the highest year-over-year jump in over a decade.
- Two-storey homes saw the greatest growth at 14.3%, to $661,730;
- Bungalows rose 12.5% to $481,460;
- Condos are up 7.4% to $356,307
Royal LePage calls for a much more moderate pace of 2.8% growth this year.
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What’s to Come for 2017 Real Estate
The greatest shakeup will take place in Vancouver real estate, with prices actually expected to drop by high single digits. The market lost steam in the last quarter due to a combo of unsustainable price growth, public policy and slower sales, all of which will continue to take their toll. While Vancouver will remain the priciest market in Canada, a new foreign investment tax, coupled with new federal mortgage qualification rules and tax will put downward pressure on demand.
Prices rose 25.6% in the Greater Vancouver region to $1,230,718. Luxurious West Vancouver remains the steepest at $3,573,148, while the suburbs of Langley and Richmond boom at 25.7% and 27.6% growth, respectively.
Buyers living in and around the province’s largest city can expect to dish out even more for a home this year, as nothing stands in the way of skyrocketing housing demand. “Unlike Vancouver, where price correction is underway, there is no relief in sight for the GTA – forward momentum and supporting fundamentals in the region are that strong,” stated Soper, adding that Toronto prices, relatively low compared to Vancouver, are a draw for investors and buyers.
Greater Toronto Area prices rose 16.1% to $720,761, and up 12.4% to $720,029 in the City of Toronto. Some of the surrounding suburbs experienced “Vancouver-like” growth such as:
- Richmond Hill, up $30.1% to $1,138,826
- Oshawa, up 26.9% to $471,957
- Whitby, up 21.3% to $610,658
- Vaughn, up 19.9% to $927,371
Buyers looking for a deal must travel increasingly far from the city core, with some pockets of affordability in the following markets:
- Hamilton, up 14.5% to $445,249
- Kitchener / Waterloo, up 12.9% to $390,715
- Niagara / Saint Catharines, up 10% to $311,577
Related Read: Hamilton Real Estate to be Hottest Market in 2017
Following gloomy economic prospects over the last two years, 2017 will offer a ray of hope for the wild rose province, as energy prices recover and stabilize. While housing sales slid drastically from 2014, the good news is homeowners held onto much of their equity, as home supply slowed along with demand. Prices dropped in Calgary just 1% year over year to $460,837, and 2.1% in Edmonton to $378,247, and are already trending up quarter over quarter. States the report, “Our outlook for Alberta may surprise the many who are anticipating another dire year for the region. While we don’t anticipate a strong housing rebound, we are calling 2016 as the bottom for this correction phase of the cycle.”
It has been a stable year for Canada’s breadbasket; while energy prices dragged on the economy, strong agricultural growth helped offset a downturn. Housing declined just 0.4% to $366,933 in Saskatoon, and down 2.6% to $340,684 in Regina, with conditions to remain flat (no pun intended) in the prairies this year.
This is to be a banner year for la belle provence, with infrastructure and tourism to boom in its largest cities and push growth higher than the national average for the first time since 2009. New transit initiatives and its 375th anniversary will drive demand in Montreal, following a 6.5% increase to $371,085 in 2016, and 5.8% growth to $307,008 in Quebec City.
Canada’s eastern edge has experienced some of the most sluggish market conditions as labour forces were hard hit by the energy downturn. While there’s little relief in store for Newfoundland (St. Jonhn’s dropped 1.5% to $334,782), prices will strengthen somewhat in New Brunswick, Nova Scotia, and Prince Edward Island:
- Fredericton and Saint John rose 10.4% and 13.2% to $257,092 and $230,405, respectively
- Moncton prices rose 0.3% to $191,678
- Halifax increased 4.3% to $310,656
- Charltottewon rose 3.2% to $228,706
Impact of 2016 Rule Changes to be Felt Through 2017
Home buyers and sellers withstood a number of changes last year from various levels of government, as housing officials attempted to reign in pricing, help affordability, and improve the quality of mortgage lending. While designed to stabilize the market, so much change introduced in such a short timeline could do more harm than good, argues Royal Lepage.
“While efforts to address deteriorating affordability in Ontario and B.C.’s largest metropolitan areas are well-intentioned, too many new taxes and regulations, by too many levels of government, introduced within such a short timeline and with perceivably little research and consultation, have caused confusion and triggered drops in consumer confidence, risking the long-term health of Canada’s housing market,” said Soper.
“Price appreciation disparities between regions have created a quandary for policymakers who have tried to tame overheated housing markets, while supporting slower ones. What our leaders have been slow to address, and what is at the heart of the matter, is the supply side of the equation in the country’s hottest markets. Housing shortages have put immense upward pressure on prices,” he concluded.