Prices in Canada’s five biggest housing markets are going up at a similiar, healthy pace — the first time that has happened in six years, Royal LePage said Thursday in its latest national house price survey.
The firm said that in the third quarter home prices in the Greater Toronto Area, Greater Vancouver, Greater Montreal Area, Calgary and Ottawa all went up by between 1.5 and 3.5 per cent from the second quarter.
Royal LePage said those increases are indicative of a “much more balanced” Canadian residential real estate market.
“Uneven regional economic growth has plagued Canada for much of the past decade, a challenge most evident in the nation’s housing markets,” said Royal LePage president and CEO Phil Soper.
“For the first time since 2011, we are seeing real estate in all five of our largest cities appreciate at a manageable, healthy clip,” he said in a release. “Canadian housing is enjoying a Goldilocks moment – not too hot, and not too cold.”
He added that, for now, the housing markets in Toronto and Vancouver have “returned to earth.” The two cities led the housing market with big price gains and then sharp swings lower, only to now see single-digit price growth.
On a year-over-year basis, several of the big markets still reflect big gains from earlier this year. In the Greater Toronto Area, prices in the third quarter were up 21.7 per cent from the same time last year, while Montreal prices were up 14.3 per cent, and Ottawa saw growth of 7.9 per cent.
Calgary prices were up five per cent year-over-year, while Greater Vancouver showed a modest gain of 2.5 per cent after its market correction last year.
Soper said rising interest rates, coupled with a strong Canadian dollar, are helping to keep price increases under control in the country’s major housing markets.
“Marginally higher borrowing costs should dampen domestic demand somewhat, and with less currency-adjusted purchasing power, foreign buyer activity is off peak levels and will likely stay that way in the near-term,” he said.
Teranet shows monthly decline
In a separate report, the Teranet–National Bank national composite house price index in September saw its first monthly decline since January 2016, weighed down by falling home prices in Toronto.
The national index, which factors in prices for 11 cities, dropped by 0.8 per cent from August. That drop was the largest monthly decline since September 2010.
The price index for Toronto was down month-over-month by 2.7 per cent. The biggest market in the country has been cooling off since the Ontario government brought in measures in April curb rapidly rising prices.
A sharper slowdown in price inflation is unavoidable, said David Madani of Capital Economics.
“And with interest rates on the rise and mortgage financing rules likely to be tightened significantly later this year, the
worst is still to come,” he said.