Condominiums were officially the strongest-performing housing type in 2017, outpacing single-family homes in terms of price growth, according to the fourth-quarter House Price Survey from Royal LePage.
The report finds that while there was strong overall year-over-year housing market growth with the national average home price prising 10.8 per cent to $626,042, condos increased 14.3 per cent to an average price of $420,823. One-storey and two-storey houses, by comparison, rose 7.1 per cent $522,963 and 11.1 per cent to $741,924, respectively.
Check out our infographic on the top 10 appreciating condos in Toronto in 2017
Toronto and Vancouver Lead Condo Growth
Most of the price growth in the condo sector was fed by activity in Canada’s largest markets; prices rose 19.5 per cent to $476,421 in the Greater Toronto Area, and 18.77 per cent to $775,806 in the Greater Vancouver region.
“To prospective homeowners in our largest cities, condominiums represent the last bastion of affordability,” stated Royal LePage President and CEO Phil Soper. “This is especially true for first-time buyers whose purchasing power has been reduced by tightening mortgage regulations.”
Condos were the only housing type to appreciate on a quarterly basis, rising 1.1 per cent, while single-family home price growth remained flat.
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This is a reverse in the usual trend, says Soper, as condo prices typically rise more slowly compared to their more expensive counterparts.
“Historically, condos have appreciated at a slower pace than detached homes, simply because supply constraints are easier to address, building upward uses much less precious land,” he stated. “For now, demand for those relatively affordable spots in the sky is so high that the trend has been reversed.”
He adds that builders bringing new planned product to market will help alleviate supply and moderate prices, but that Canada is now a “condo nation, like other advanced economies around the world.”
Sales to Pick Up Later in the Year
However, much of the growth seen in 2017 was achieved in the first part of the year, before measures like the Ontario Fair Housing Plan were put in place. Activity slowed significantly in the fourth quarter, the report states, especially for detached homes. Royal LePage also forecasts a slower start to the 2018 market as new OSFI mortgage rules are absorbed, but that typical supply and demand factors will make for a more robust second half of the year.
“In the tug of war between a rapidly expanding economy and tough mortgage regulations, the economy wins,” Soper states. “The demand for new housing, be it for purchase or rent, is going nowhere but up.”
The report predicts home prices will rise 4.9 per cent nationally by end of 2018, 6.8 per cent in GTA, 5.2 per cent in Greater Vancouver, and 5.5 per cent in Greater Montreal.