Royal LePage’s Q2 2024 Home Price Update and Market Forecast

In Q2 2024, Canada’s housing market saw mixed dynamics, with overall sales declining despite a strong first quarter. The Bank of Canada’s interest rate cut in June did not significantly revive buyer interest, leading to more balanced market conditions with rising inventory levels. Royal LePage predicts a 9.0% increase in home prices by Q4 2024 compared to the previous year, expecting moderate price growth throughout the second half of the year.

Phil Soper, president and CEO of Royal LePage, noted the unusual trend of rising home prices amidst declining sales, particularly in Toronto and Vancouver. However, the prairie provinces and Quebec experienced low supply and high competition. The Royal LePage House Price Survey reported a 1.9% year-over-year increase in the national aggregate home price to $824,300, with single-family detached homes and condominiums seeing modest gains.

Soper highlighted the potential for a surge in demand due to sustained high interest rates and pent-up buyer interest. The delicate balance between inflation control and economic vitality is crucial, as high rates could trigger a rush of buyers, increasing market instability.

High borrowing costs also hinder new home construction, exacerbating the housing shortage amid population growth. Builders face challenges due to elevated borrowing rates, labour shortages, and rising material prices, making new projects financially unsustainable. Soper emphasized the need for innovative solutions to ensure affordable housing availability.

The second quarter press release indicated slower market activity in Toronto and Vancouver, with inventory building up, while the prairie provinces and Quebec saw demand outpacing supply. Quebec City recorded the highest year-over-year price increase at 10.4%. A Royal LePage survey revealed that 51% of sidelined homebuyers would resume their search if interest rates decreased.

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