According to a recent report by Royal LePage, the aggregate price of homes in the Greater Toronto Area (GTA) is anticipated to remain relatively unchanged for the rest of the year, even with the Bank of Canada’s decision to resume increasing interest rates. The real estate firm has adjusted its previous forecast, now expecting prices to rise by 11 percent year-over-year, compared to their earlier prediction of a two percent decline.
However, this increase is primarily attributed to the significant price gains experienced in the first two quarters of 2023, as the market rebounded from a prolonged slump. Royal LePage forecasts that the aggregate price of a home in the GTA will see minimal growth for the remainder of the year, with an increase of only about $6,000 or 0.5 percent.
Despite the current tight competition in the market, the GTA housing market continues to exhibit strong activity across all segments, even though new listings are currently lower than last year. Royal LePage’s Chief Operating Officer, Karen Yolevski, explained that potential sellers are hesitant due to the additional interest rate hikes. The robust job market and the ability to work remotely have provided individuals with the option to wait, exacerbating supply shortages and leading to multiple-offer situations for nearly every listing.
In the second quarter, the aggregate cost of a home in the GTA rose by 1.1 percent year-over-year and 5.4 percent compared to the first quarter. However, Royal LePage does not anticipate such strong price appreciation to continue, especially with the current borrowing costs reaching a 22-year high. Nevertheless, the firm does not foresee a return to the declines experienced in 2022 when the average price of a Toronto home dropped by approximately 22 percent from peak to trough.
Royal LePage President and CEO, Phil Soper, acknowledged that despite the interest rate hikes, many buyers remain active in the market. The demand is still robust, particularly among those who have secured a rate hold. Soper mentioned that buyers determined to make a purchase this year have accepted the reality of higher initial carrying costs, as they believe that interest rates are near their peak and will become more affordable in the near future.
On a national scale, Royal LePage’s report suggests that the aggregate home price will increase by around 8.5 percent in 2023, reaching over $821,000.