Western Canada’s housing market doldrums will continue, while some previously sleepy housing markets in the east will be Canada’s strongest this year, a forecast from Royal LePage predicts.
The real estate brokerage collected median house price data for 63 communities across Canada and offered forecasts for the rest of the year for nine of the largest.
Watch: The best places in Canada to buy a house in 2019, according to MoneySense. Story continues below.
Vancouver’s housing market will see the largest price declines this year, with the median price falling 5.5 per cent by the end of this year, compared to the end of last year.
Meanwhile, Halifax and Greater Montreal ― two places not traditionally known for having booming housing markets, will be the big winners, with prices growing 4 per cent and 4.5 per cent, respectively, the real estate brokerage forecast.
That is, if you define “winners” as places with rapid house price growth ― an increasingly controversial idea in these days of historically poor affordability.
Montreal’s success (or, if you prefer, failure) may come in part from the city suddenly becoming a magnet for foreign investors in recent years, particularly those turned off by the foreign buyers’ taxes in the Toronto and Vancouver areas.
“The most recent data indicate that the share of foreign buyers in the region increased from a marginal ratio of less than 2 per cent a few years ago to 3.4 per cent in 2018,” Royal Lepage noted in its report.
The city is experiencing a large deterioration in affordability, and it’s not going unnoticed. City council earlier this year voted to require developers to build more affordable housing as part of their projects.
But Phil Soper, Royal LePage’s president and CEO, notes in the report that what Montreal is experiencing today isn’t nearly on the scale of the madness seen in Toronto and Vancouver a few years ago.
“The city’s prices remain one third of Greater Vancouver and half of those in the Greater Toronto Area. At Montreal’s current home price growth rate, it would take 13 and 19 years respectively for Montreal home prices to catch up to Toronto and Vancouver.”
‘Stubborn’ sellers won’t lower prices
Western Canadian housing markets will see declines this year, but things would be worse if not for “many stubborn homeowners in B.C. and Alberta” who “remain unwilling to let their precious real estate go for less than what they perceive as fair value, which has gone a long way to protecting existing home values,” Soper said.
Conversely, it also means affordability remains poor. According to the Royal Bank of Canada, it took an average-earning household in Vancouver an absurd 82 per cent of their income to cover the costs on an average home in the second quarter of this year.
But that’s actually an improvement from six months earlier, when it was 86.9 per cent. In Toronto, it’s 66 per cent and in Montreal, it’s 44.3 per cent.
Royal LePage compiled the median house prices and the change in house prices across 63 communities in Canada. Some of southern Ontario’s larger cities, along with Montreal and Ottawa, have seen the fastest price growth over the past year.
But when it comes to actual house prices, the Toronto and Vancouver areas, along with some nearby cities, still dominate the list of most expensive markets.
Note that Canada’s worst-performing housing market, West Vancouver, is also its priciest. The technical term for this is “payback.”