Royal LePage sees 9.5% national price gain this year

By Staff | July 13, 2017 | Last updated on July 13, 2017
2 min read

The aggregate price of a home in Canada increased 13.8% in Q2 from a year earlier, reaching $609,144, Royal LePage says in the latest release of its national house price composite data.

The data, compiled from proprietary property information from 53 of the nation’s largest real estate markets, showed continued expansion in the largest metropolitan markets.

Royal LePage forecasts national aggregate home price growth will slow somewhat this year, increasing by 9.5% in calendar 2017 to reach $617,773.

“The rate of national house price appreciation that we experienced in the second quarter continues to be above what we would consider a normal range, driven primarily by very strong year-over-year price growth across much of Ontario,” Royal LePage CEO Phil Soper says in a statement.

Greater Vancouver’s housing correction, which started in August 2016, reversed in Q2, Royal LePage says, with the city now poised for continued price gains. In Q2, Calgary also posted its strongest year-over-year home price growth since the oil price crash.

Read: Big banks follow BoC, raise mortgage rates

The Greater Toronto Area moderated, however, as “the combination of eroding affordability and government legislation has pushed many buyers to the sidelines — at least temporarily bringing balance to the country’s largest market and slowing home price appreciation within the region,” Royal LePage says.

Soper says GTA home value price appreciation of 20% to 30% annually has not been “sustainable or healthy,” though much-needed balance is returning to the market. “[T]he GTA’s recent drop in sales activity may well signal calmer waters ahead for the province,” he says.

The Montreal city centre’s housing market saw near double-digit growth in Q2 amid a regional economic revival and an unemployment rate that has fallen to the lowest level since Statistics Canada started tracking it in 1976, Royal LePage says.

It adds that the BoC’s 25-basis-point rate hike on Wednesday will help normalize economic and housing market conditions.

Read: BoC sounds bullish as key rate hiked to 0.75%

Within the last two years, Canadians spent more on mortgage principal payments than mortgage interest payments for the first time since Statistics Canada began compiling the data in 1990, the report says.

The ratio of debt to disposable income remains high — though it dropped in Q1 to 166.9% — while Canadians’ interest-only debt service ratio was at a record low 6.1%. Royal LePage also pointed to Canada Mortgage and Housing Corporation mortgage delinquency rates, which show the hottest markets of Toronto (12 basis points) and Vancouver (15 basis points) have readings of less than half of the national average (34 basis points).

“While many commentators have feared the effect of an interest rate hike, we believe that the market is better served by a healthy economy that requires a return to normal conditions,” Soper says.

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Don’t try to predict long-term rates staff


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