Toronto housing market on track to be hottest in Canada for 2014

September 28, 2024

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By: Susan Pigg Business Reporter, Published on Wed Jul 09 2014

Toronto is on track to end 2014 as the hottest housing market in the country, with prices likely to rise 8.1 per cent, year over year, outpacing even Vancouver’s anticipated 7.1 per cent climb, according to Royal LePage’s House Price Survey and market forecast.
Even the GTA’s much-watched condo sector is expected to end the year on a healthy note, given that prices have already increased 5.4 per cent, to an average of $380,453, in the first half of 2014, year over year, notes the report released Wednesday.
That compares to just 0.3 per cent growth in condo prices in Vancouver during the same period. There the average condo now sells for $491,984, says the national real estate firm. That is a turnaround from last year when Vancouver saw house price declines.
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Bungalows in that west coast city were up 5.2 per cent by mid-year to $1.1 million, on average, while two-storey detached home prices climbed 4.6 per cent, year to year, to $1.2 million.
Unrelenting demand for housing in Canada’s two biggest cities — “chronic supply shortages” have played out, in Toronto in particular, in often irrational bidding wars that have propelled prices further into the stratosphere — is actually masking “temperate” demand in most other areas of the country, notes the report on national home sales to the end of June and looking ahead to 2015.
“While a widening affordability gap in Canada’s largest urban centres is characterizing the national market Canadians read about daily, year-over-year house price increases in most regions of the country are presently tracking below the historical average,” notes Phil Soper, president and chief executive of Royal LePage in a statement.
The national average home price is expected to increase 5.1 per cent by year’s end, over 2013, skewed upward largely by Toronto, Vancouver and, to a lesser extent, Calgary. That western boom town is expected to see house prices climb by an average of 5.5 per cent by year’s end in the face of strong work-force growth and fierce competition for properties.
“A closer look at Canada’s residential real estate market points to a tale of two city types, in which big city housing activity represents a small part of the picture but accounts for a large part of the gains in national average home prices,” says Royal LePage.
But that growth should ease in the coming year.
“Compared to other major forecasts, our year-beginning national outlook predicted a higher level of 2014 average price appreciation, yet supply constraints in a handful of our largest cities necessitate a revision upwards,” said Soper.
“Looking ahead to 2015, we expect house prices to track more closely to the rate of general economic growth. That is, we see price increases in Canada’s largest cities moderating, just as our smaller city markets should see a lift.”
Across the GTA, two-storey homes and detached bungalows saw the biggest price growth, at 8.3 and 7.2 per cent respectively in the first half of 2014, year over year. That brought the average price of two-storey to $730,806 and a bungalow to $611,906, says Royal LePage.
On the condo front, strong demand and price appreciation continues to be driven by investors looking to hold for the long term and cash in on Toronto’s high rents, as well as young buyers looking for affordable homes close to downtown jobs, especially in bigger units that can accommodate families, says Gino Romanese, a senior vice president.
Here’s the expected price growth across the rest of the country by the end of 2014:
HALIFAX: 1.9 per cent
MONTREAL: 1.7 per cent
OTTAWA: 2.5 per cent
WINNIPEG: 2.8 per cent
REGINA: 2.1 per cent
EDMONTON: 4.5 per cent