[Royal LePage] Fourth Quarter House Price Survey Results Seal 2017 as 'the Year of the Condo'
by Yvonne von Jena | January 10, 2018
TORONTO, January 10, 2018—Royal LePage released their fourth quarter House Price Survey report. Housing values in the House Price Survey are based on the Royal LePage National House Price Composite, produced quarterly through the use of company data in addition to data and analytics from RPS.
Royal LePage is coining 2017 as ‘the year of the condo’ due to the fact that, according to its National House Price Composite, condominium prices appreciated at the fastest rate of all housing types. As reported by Royal LePage, Canada’s residential real estate market saw strong, but slowing year-over-year price growth in the fourth quarter of 2017. Meanwhile, in both Greater Vancouver and the GTA, condominium prices continued to outpace all other property types, primarily due to growing affordability constraints within these markets. The report claims that this surge is fueled by “Peak Millennials” looking to enter the market and immigration/interprovincial migration to Ontario and British Columbia.
The report sites that the two demographics fueling the condominium surge is “Peak Millennials” who are now at the age for homeownership, and immigrants from different countries as well as interprovincial immigrants seeking gainful employment. Phil Soper, President and CEO of Royal LePage, says, “To prospective homeowners in our largest cities, condominiums represent the last bastion of affordability. This is especially true for first-time buyers whose purchasing power has been reduced by tightening mortgage regulations.”
He continues to say that, “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. For now, demand for those relatively affordable spots in the sky is so high that the trend has been reversed. As builders respond, new projects will come on-stream and condominium price increases will moderate somewhat. However, without hesitation, we can say Canada is now a condo nation, like other advanced economies around the world.”
Mr. Soper adds, “As condominiums continue to grow in demand and importance in Canada’s cities, it’s becoming increasingly imperative that real estate developers and policymakers support the creation of housing that addresses demographic trends, particularly as millennials start having children in increasing numbers. This creates a need for larger condominium units that are livable for families.”
According to the Royal LePage National House Price Composite, compiled from proprietary property data in 53 of the nation’s largest real estate markets and in addition to data and analytics from RPS, the findings below were noted by the report:
Provincial & City Summaries/Trends
Below are the aggregate year-over-year prices of homes in Canada’s major markets as of the fourth quarter in 2017 according to Royal LePage.
Condo Prices In British Columbia & Ontario
In-line with the company’s previous Market Survey Forecast, Royal LePage predicts that the price of a home in Canada will increase 4.9%by the end of 2018.
During the fourth quarter, the Office of the Superintendent of Financial Institutions (OSFI) published the final version of its new mortgage rules, which includes a financing stress test for borrowers with uninsured loans, designed to ensure that home purchasers can withstand higher payments if interest rates rise. Royal LePage anticipates that the new measure, which took effect on January 1, 2018, will slow the housing market in the first half of the year, as buyers adjust their expectations and many market participants take a “wait and see” approach.
According to the Royal LePage report, the effects of OFSI’s measures expected to be contained to the first half of 2018 for most markets, but potentially damaging to those in a state of fragile recovery.