Royal LePage, a prominent real estate firm, has revised its end-of-year home price projection upward, now anticipating a 9% annual increase in home prices by the fourth quarter of 2024. This adjustment follows an unexpectedly robust beginning to the year.
The company’s latest housing price survey revealed that the aggregate price of a home in Canada increased by 4.3% year-over-year in the first quarter, reaching an average of $812,100. Phil Soper, President and CEO of Royal LePage, noted that the market experienced a significant turning point early in 2024, with home prices beginning to rise after previously reaching a low.
Soper highlighted the shift in buyer behavior, with many opting to purchase homes ahead of the anticipated competitive spring market rather than waiting for a potential drop in mortgage rates. This change is steering the market away from favoring buyers and towards a seller-driven market.
Recent statistics from the Canadian Real Estate Association (CREA) support this trend, showing a slight increase in home sales in March by 0.5% month-over-month and 1.7% year-over-year. The national average home price also rose by 2% from the previous year to $698,530. Larry Cerqua, CREA Chair, mentioned that recent data and market observations suggest a surge in activity.
Originally, Royal LePage predicted a 5.5% rise in home prices for the fourth quarter of 2024, but the revised forecast now expects a 9% increase, bringing the aggregate price to approximately $860,555. The cities of Toronto and Montreal are projected to experience the largest gains, with anticipated increases of 10% and 8.5%, respectively.
This forecast comes despite the challenging high interest rate environment, which had previously kept many potential buyers on the sidelines. The Bank of Canada has maintained its benchmark rate at 5% through several decisions but hinted at a possible rate cut in June if inflation continues to decline.