According to Royal LePage, one of Canada’s largest real estate firms, aggregate home prices in the Greater Toronto Area (GTA) are expected to increase by 11 percent in the final quarter of 2023. This prediction comes as housing prices in Canada’s major cities are already at steady highs.
Royal LePage’s housing-price forecast, published on July 13, states that average Canadian home prices will remain steady for most of 2023. However, the firm anticipates a decrease in activity in the housing market due to the Bank of Canada’s recent decision to raise its overnight lending rate to 5 percent.
The tight rental market in the GTA is also a cause for concern. The average rental price of a one-bedroom apartment in the region increased by more than 15 percent year-over-year in the first quarter of 2023.
Royal LePage predicts that the aggregate price of a GTA home, which includes the median prices of all housing types, will rise by 11 percent in the fourth quarter of 2023 compared to the same quarter in the previous year. The aggregate price of a home in the GTA already increased by about 1 percent year-over-year to over $1.18 million in the second quarter of this year.
In terms of housing availability, Royal LePage reports that the aggregate price of a home in Canada in the second quarter of this year is 5.6 percent below the peak reached in the first quarter of 2022. The firm has adjusted its national year-end forecast to project an 8.5 percent increase in housing prices in the fourth quarter of 2023 compared to the final quarter of 2022.
Royal LePage highlights the chronic shortage of housing supply as a contributing factor to rising home prices. The firm calls for increased support from officials to promote the development of more affordable, purpose-built rental buildings.
Recently, the Toronto Regional Real Estate Board also reported that Toronto home sales in June were affected by uncertainty surrounding the Bank of Canada’s expected rate hikes. However, average home sale prices still saw an increase during the same month.
The president of the Toronto Regional Real Estate Board, Paul Baron, emphasized the lack of inventory as a primary reason for potential buyers being sidelined.
The Canadian Press contributed to this report.