Condominium prices rose faster than any other housing type in the fourth quarter of 2017, according to the Royal LePage National House Price Composite.
The median condo price rose 14.3% to $420,823 on a year-over-year basis, driven by large gains in Canada’s largest condo markets, especially Toronto and Vancouver. In the GTA, the median price of a condominium increased 19.5% year-over-year to $476,421, while in Greater Vancouver condos rose 20.2% to $651,885.
“To prospective homeowners in our largest cities, condominiums represent the last bastion of affordability,” said Royal LePage president and CEO Phil Soper in a release. “This is especially true for first-time buyers whose purchasing power has been reduced by tightening mortgage regulations.”
Overall, the price of a home in Canada increased 10.8% year-over-year to $626,042 in the fourth quarter of 2017. The median price of a two-storey home rose 11.1% to $741,924, and the median price of a bungalow climbed 7.1% to $522,963.
Condos were the only market segment to appreciate on a quarter-over-quarter basis among all housing types studied, rising 1.1% in the final three months of the year. Two-storey homes and bungalows were essentially flat, falling by 0.3% and 0.2% quarter-over-quarter, respectively.
New OSFI rules that include a financing stress test for borrowers with uninsured loans came into effect on Jan. 1. Royal LePage said the new measure would slow the housing market in the first half of the year, as buyers adjust their expectations and many take a “wait-and-see” approach.
“The unsustainably high rates of home price appreciation witnessed in recent years in B.C. and Ontario were dangerous to the stability of not only the housing market but to the broader economy itself,” Soper said. “Policy measures like the OSFI stress test will quell runaway housing inflation to an extent. However, we do foresee an upswing in demand in the latter portion of the year, as prospective buyers adjust to the new realities. To put it another way, the demand is still there.”
Royal LePage predicted that the price of a home in Canada would increase 4.9% by the end of 2018. Increases would be largest in the Greater Montreal Area (5.5%), Greater Toronto Area (6.8%) and Greater Vancouver (5.2%).