In the wake of several turbulent years, Canada’s housing market might finally stabilize in the coming year, showing signs of a return to more conventional activity and pricing patterns. Projections suggest that the Bank of Canada will likely reduce its overnight lending rate in the latter part of 2024. This move is expected to reignite interest among sidelined buyers, who are adapting to the current lending landscape. Additionally, the formation of new households and the influx of newcomers to Canada are poised to further push prices upward.
Phil Soper, President and CEO of Royal LePage, expressed, “Looking ahead, we see 2024 as a critical turning point for the national economy, with many Canadians acknowledging the end of the ultra-low interest rate era. The adjustment to manageable borrowing costs in the mid-single-digit range will strongly influence our collective mindset, especially with the modest rate cuts anticipated from the Bank of Canada.”
As per the Royal LePage 2024 Market Survey Forecast, the aggregate home price in Canada is projected to rise by 5.5% year over year, reaching $843,684 in the fourth quarter of 2024. The median price for a single-family detached property is expected to climb by 6.0% to $879,164, while condominiums are forecasted to see a 5.0% increase, reaching $616,140.
Royal LePage's forecast hinges on the assumption that the Bank of Canada has completed its interest rate hike cycle and that the key lending rate will remain stable at five percent through the initial half of 2024. The anticipation is for the central bank to initiate modest rate cuts by late summer or fall. Concurrently, several major financial institutions have already begun offering discounts on fixed-rate mortgages.
Soper reflected on the housing market’s recent tumultuous journey, stating, “Canada's real estate market has undergone a roller coaster ride over the past four years. The global pandemic initially halted market activity in early 2020, but a subsequent surge in demand and price appreciation followed as Canadians sought safety and larger living spaces amidst global uncertainty.” He continued, “By spring 2022, home prices had soared to unprecedented levels. However, the swift and steep rise in interest rates to combat inflation triggered an extended market correction.”
The expectation is for a gradual adjustment in markets, with a move toward more typical home sale transaction levels in 2024 and a subsequent trend of appreciating house prices as the year progresses. Nationally, modest quarterly gains in home prices are foreseen for the first two quarters of 2024, with more pronounced increases expected in the latter half of the year, coinciding with the anticipated commencement of interest rate cuts by the Bank of Canada.