Toronto’s real estate market is expected to rebound in 2024 after the higher cost of borrowing weighed on sales over much of the past year, according to a market survey forecast by Royal LePage.
The Canadian real estate franchiser is estimating that aggregate home prices will rise six per cent over the course of 2024 to an average of almost $1.2 million. Single-family detached homes are expected to see a seven per cent increase in price, and condominiums in the GTA are expected to rise by five per cent.
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The expected price gains in the GTA trail only Calgary, where aggregate homes are expected to increase by eight per cent, single-family detached homes by six per cent and condos by 9.5 per cent.
Canadian homes, on average, are expected to increase by 5.5 per cent in price for aggregate properties, whereas single-family detached homes are expected to see a six per cent increase. Condos will see their average price rise by about 5.5 per cent.
“One of the things that’s going to contribute to the up-tick is that we’re quite far down [in sales],” Phil Sopher, president and CEO of Royal LePage, said during an interview with CP24 on Thursday.
Despite a 30 per cent lull in sales from the average amount this year, demand for housing remains and housing costs continued to rise.
Detached and semi-detached homes, as well as townhouses, have all seen price increases in Toronto and the rest of the GTA from October 2022, ranging from 1.1 to 6.1 per cent. The only exception is condos, which have decreased by 1.2 per cent in price to an average of $708,780 in the region this fall.
Sopher expects prices to remain steady into the first quarter of the New Year before increasing in the second half of 2024 when many economists expect the Bank of Canada to begin cutting interest rates from a 22-year high.
“I think a very small rate cut by the central bank, by the Bank of Canada, will unleash a lot of that pent-up demand that we’ve had a lot of that over the last couple of years, which, by the way, is the longest slow-down in Canadian and Ontario real estate in 25-years. Even the great recession was only 9-months, we’re going to be two-years here. So there’s a lot of pent-up demand,” he said.
A recent decision to hold the interest rate by the Bank of Canada was made last week, following evidence that higher interest rates are helping to bring inflation down.
Sopher says that while prices are expected to increase, if there is not an increase in housing supply, the end of the decade is “where the risk is.”
Last March, the city issued the Housing Action Plan, which aims to meet or surpass the Ford government’s provincial housing target of adding 285,000 new homes in the city within the next 10-years.
This follows a report by the Building Industry and Land Development Association (BILD) and the Federation of Rental-housing Providers of Ontario that suggests the number of renter households in the GTA will rise by 58 per cent over the next decade, adding pressure to the ongoing housing crisis.
“But come 2025, I think we’ll have less,” Sopher said. “[Unless] we make real material changes in supply of homes we have available, and we are at risk of double digit home pricing increases again.”
The average selling price of a Toronto home across all property types peaked at $1,334,062 in February 2022 before dropping to a low of $1,037,542 later that year, according to Toronto Region Real Estate