After 2 years of strong price appreciation, Canadian home prices are expected to increase significantly in 2022, albeit at a slower pace than in previous years. According to the Royal LePage Market Survey Forecast, the aggregate price of a home in Canada is set to rise 10.5% year-over-year to $859,700 in the fourth quarter of 2022, with the median price of a single-family detached property projected to increase 11.0% to $918,000, and the median price of a condominium expected to increase 8.0% to $594,000.
Pent-up demand from buyers who were unable to transact in 2021, coupled with the growing need for shelter from new household formation and newcomers to Canada, will continue to put upward price pressure on a market suffering from a chronic supply shortage. Canada's strong economy, healthy full-time employment trends, and paradoxically, the emergence of a new coronavirus variant, should all contribute to the strength of the country's real estate market.
"While the emergence of another COVID-19 variant is disheartening, we can't ignore its probable impact on our nation's real estate market," said Phil Soper, president and CEO, Royal LePage. "It is hard to imagine that the Bank of Canada will begin the inevitable campaign to dampen inflation through higher rates with much still to be learned about Omicron and cases on the rise again. Employers may back-off plans to mandate a return to the office, sustaining the hyper-focus on the importance of the home as a place to both live and work. And, normal travel and entertainment will again be curtailed, continuing the household cash stockpiling trend that has defined the pandemic era."
While pandemic-related lockdowns and a mandate to work remotely drove up demand for larger homes with outdoor space from buyers who might typically have purchased condominiums prior to the pandemic, the condominium segment has rebounded as affordability wanes in the middle and upper ends of the market.
"Demand for condos has picked up significantly in recent months, especially in major cities like Toronto and Montreal," said Karen Yolevski, chief operating officer, Royal LePage Real Estate Services Ltd. "The price appreciation gap between condominiums and detached properties is narrowing. This trend will continue in 2022, as entry-level buyers are priced out of more expensive property segments, and the revival of the downtown core continues. Young professionals and those seeking a vibrant entertainment scene generally gravitate to the city lifestyle."