Royal LePage boosts home price forecast to 15% growth despite rate hikes, cooling demand
Persistent demand and low supply are trumping rising mortgage costs for now
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Royal LePage is boosting its home price forecast for this year, despite signs of cooling in some markets and expectations of higher mortgage rates.
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The real estate brokerage now expects aggregate home prices to rise 15 per cent in 2022 to $895,900, up from its December forecast.
The fresh forecast comes after aggregate home prices rose 25 per cent in the first quarter despite rate hikes by the Bank of Canada, a promising sign that prices will remain strong. The price gain was the largest in the first quarter ever recorded by the company.
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“Entering 2022, we had anticipated a strong first half, and moderating real estate markets thereafter… We are seeing the first signs of moderation in some regions, as more inventory is becoming available and competition eases slightly,” said Phil Soper, president and chief executive of Royal LePage in a release.
“The first quarter of the year was so strong, however, that we are bumping up our 2022 outlook,” Soper added. “And, home prices will continue to climb in the months ahead as a result of our relentless low supply-high demand imbalance.”
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In other signs that a sellers’ market remains in many communities, Barrie, Cambridge, Kitchener-Waterloo and Oshawa, cities in Ontario’s Golden Horseshoe region, all passed the $1 million mark for the first time for a median single-family detached home.
Kingston, Ontario, reported the highest year-over-year aggregate and detached home price gains in Canada for the second quarter in a row.
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Royal LePage said it did not expect the measures announced in the most recent federal budget to move the needle on housing affordability. While Soper said funding towards increasing supply was a welcome first step, measures like the two-year ban on foreign buyers would be ineffective because they represented a small portion of Canadian homeowners.
Stronger cohesion across all levels of government is needed to make housing more accessible to Canadians, said Soper.
“Access to suitable shelter is one of the great social challenges of our time,” Soper said. “I am pleased to see it addressed in the federal budget, however the budget requires significant participation from provincial and municipal governments to hit its target to provide housing for current demand as well as future demand from new household formation and immigration.”
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