Continued high demand for Canadian real estate expected to appreciate the value of Canadian homes by 2.5%
Home ownership remains a priority for Canadians, as 91% report owning a home is part of the Canadian dream.
Toronto, Kelowna and Laval, Dec. 10th, 2015// High demand and low supply continued to characterize Vancouver’s and Toronto’s housing markets throughout 2015 as competition from buyers over the limited inventory of single-family homes pushed prices higher.
5% Increase In 2016 Anticipated For GTA
The average residential sale price increased 17 per cent in Greater Vancouver and 10 per cent in the Greater Toronto Area, to approximately $947,350 and $622,150, respectively. As demand shows no signs of waning, these markets are expected to continue to see price appreciation in 2016, of seven per cent in Greater Vancouver and five per cent in the Greater Toronto Area.
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2.5% Increase in 2016 Nationally
“Based on the projections for Canada’s key housing markets, RE/MAX expects the average home price in Canada to increase 2.5% in 2016,” said Gurinder Sandhu, Executive Vice President, RE/MAX INTEGRA Ontario-Atlantic Canada Region. “While we expect to see some price decreases, particularly in regions that rely on the oil and natural resource sectors, strong demand in Canada’s urban centres is expected to continue throughout next year.”
Regions outside of Canada’s highest-priced cities reported a spillover effect from the price increases in Greater Vancouver and the Greater Toronto Area continuing a trend that RE/MAX reported this spring. There were significant year-over-year price increases in Victoria (13%), Fraser Valley (10%), Hamilton Burlington (12%) and Barrie (8%).
It has been recently reported that the federal Department of Finance is considering increasing the minimum down payment for homes above $500,000 on a graduated scale. If implemented, RE/MAX expects the effect on first-time buyers in most of Canada’s housing markets to be minimal. However, in Vancouver and Toronto, where entry-level homes are often above the $500,000 threshold, these restrictions may be discouraging to some potential buyers. According to recent RE/MAX survey findings, over two-thirds of Canadians already agree that 10 per cent or more is a good down payment for a home.
New Canadians continued to be an important demographic in Toronto, Vancouver and Montreal. Attracted to Canada’s stable economy and low Canadian dollar, this trend is expected to continue through 2016.
In a recent Leger survey conducted for RE/MAX, 70 per cent of homeowners agreed that REALTORs® provide value when buying or selling a home. In competitive markets, sellers want to ensure they maximize the value of their homes, while buyers look for guidance during the fast-paced bidding process. Successful buyers typically put in an offer without conditions and have their deposits in hand.
Housing markets in Calgary and Edmonton showed slower activity but haven’t experienced significant price adjustments. The average residential sale price in Calgary saw a moderate five cent decrease, due primarily to a larger proportion of sales at the lower end of the market. In Edmonton, the average price increased by two per cent despite more inventory on the market. An ongoing $5 billion development project in downtown Edmonton has stimulated the local economy and helped to keep employment levels up, mitigating the impact of oil industry layoffs.
“In Alberta, a year after the sudden drop in oil prices, the housing markets have shown resilience,” said Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. “With oil price volatility continuing to make buyers feel uncertain, we do expect the average sale price to decrease next year, by 3.5 per cent in Edmonton and four per cent in Calgary.”
Outside of B.C. and Southern Ontario, high inventory continued to be a significant factor affecting the markets in many cities, including Saskatoon, Regina, Montreal, Quebec City, Halifax and St. John’s. This is primarily due to a period of increased construction; though new construction slowed down in most of these cities, it will take some time for the market to absorb the product.