Canada’s average home price increased between 3.9% and 5% in Q2 2014, and prices will keep rising the rest of the year, shows the Royal LePage House Price Survey and Market Survey Forecast.
Big city housing activity represents a small part of the picture but accounts for a large part of the gains in national average home prices.
“Chronic supply shortages are driving price spikes in Canada’s major cities, masking otherwise moderate home price appreciation nationally,” says Phil Soper, president and chief executive of Royal LePage. “While a widening affordability gap in Canada’s largest urban centres is characterizing the national market Canadians read about daily, year-over-year house price increases in most regions of the country are presently tracking below the historical average.”
The shortage of detached single-family houses in Toronto once again led to significant price growth. In Calgary, new listings could not keep up with strong demand from an expanding workforce. Vancouver, which just last year was seeing year-over-year price declines, is now seeing prices increase in detached home categories, pushing regional price averages to record heights. While the Montreal market recorded lower price gains than its larger metropolitan counterparts, more people bought homes following the provincial election in April.
Read: Canadians investing more
In contrast, smaller markets are seeing moderate gains. In Ontario, London posted year-over-year price increases of 2.2% and 2.0% for detached bungalows and standard two-storey homes, respectively, while Ottawa remained relatively flat at 1.3% and 0.8% in the same categories. In Edmonton, the price of a detached bungalow remained flat, dropping 0.2% year-over-year, while standard two-storey homes rose 3.8%, compared to Calgary’s 9.7% and 7.9% increases in the same categories. In British Columbia’s Okanagan region, Kelowna saw a 2.8% rise in the price of detached bungalows compared to Vancouver’s 5.2% rise in the same category.
For the remainder of 2014, Royal LePage is projecting that the average national house price will increase 5.1% for the full year.
“Looking ahead to 2015, we expect house prices to track more closely to the rate of general economic growth. That is, we see price increases in Canada’s largest cities moderating, just as our smaller city markets should see a lift,” notes Soper.