Canadian home prices expected to increase by 2.5 per cent in 2018

Canadians continue to look for balance between affordability and amenities outside of major urban centres

TORONTO and KELOWNA, BC, Dec. 14, 2017 /CNW/ - This past year saw the single-family detached home and condo markets diverge on distinctly different paths in Canada's two highest-priced real estate markets, Greater Vancouver and the Greater Toronto Area (GTA). The trend is expected to continue into 2018 as a mix of relative affordability for condo units and price appreciation for detached homes in recent years, combined with government policy changes in both markets, has helped push an influx of buyers toward condo ownership. 

In Greater Vancouver, demand for condos continues to outpace supply, resulting in the average price of a condo rising an estimated 16 per cent year-over-year, from $553,604 in 2016 to $643,778 in 2017. The GTA's condo market saw price appreciation of 22 per cent in 2017, as the average sale price for a condo rose to an estimated $523,437, up from $429,241 in 2016. The significant condo price appreciation was not matched in the single-family detached home market, as prices were roughly stable year-over-year in Greater Vancouver and up a relatively more modest eight per cent in the GTA in 2017.

"The single-family detached home segment of the market in both the GTA and Greater Vancouver has felt the most significant impact following recent provincial government policy changes designed to slow the record-setting price appreciation in those regions over the last few years," said Christopher Alexander, Executive Vice President and Regional Director, RE/MAX INTEGRA Ontario-Atlantic Canada Region. "As evidenced by the activity in their respective condo markets, however, the desire to purchase a home remains strong. Based on discussions with over 30 brokers from key real estate markets across Canada, RE/MAX expects the average home price in Canada to increase 2.5 per cent in 2018."

According to a survey conducted by Leger on behalf of RE/MAX, the appetite for home ownership remains strong with roughly half of Canadians (48 per cent) considering the purchase of a home in the next five years. Of those who are considering purchasing a home, the top three reasons for doing so are to upgrade their current home, to purchase a starter home as a means of entering the housing market and to upsize from their current home to accommodate a change in family make-up. The survey also found that access to outdoor spaces was a key factor for many Canadians when considering purchasing a home, with 87 per cent agreeing that access to green space was important to them and 82 per cent agreeing that having a backyard was important.

In order to find a balance between the home features they're looking for and affordability, many buyers are continuing to look at real estate markets outside of the country's largest urban centres. These move-over buyers leaving the GTA and Greater Vancouver have contributed to increased demand and considerable year-over-year average price increases in Kelowna (nine per cent), London-St. Thomas (18 per cent), Hamilton-Burlington (15 per cent), Barrie (19 per cent), Durham Region (19 per cent), Niagara (23 per cent), Kingston (eight per cent), and Ottawa (nine per cent).

Much of the activity in regional markets across Ontario was fuelled by price appreciation in Toronto during the first four months of the year prior to the introduction of the provincial government's Fair Housing Plan. The 16-point plan introduced a 15 per cent non-resident speculation tax, which slowed demand from overseas buyers in the upper-end of the market. The policy changes as a whole curtailed activity significantly for single-family detached homes throughout the GTA in the short-term.

The new OSFI mortgage qualification rules that come into effect on January 1, 2018, also impacted housing market activity toward the end of this year and are expected to slow activity in real estate markets across Canada in the first part of 2018. This fall, a number of regions including Fraser Valley, Edmonton, Regina, Winnipeg, Mississauga and Oakville experienced increased demand from buyers looking to purchase homes before the new stress test regulations take effect.

"Following increased fall market activity in some regions, we anticipate the new mortgage stress test to slow activity across Canada during the first few months of 2018," said Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. "Based on conversations with RE/MAX brokers, we anticipate the greatest impact of decreased buyer purchasing power to be in Victoria, Greater Vancouver, Kelowna, North Bay, London-St. Thomas, Barrie, Hamilton-Burlington, the GTA, Durham Region, Kingston, Ottawa, Halifax and St. John's."

As oil prices continue to stabilize, both Calgary and Edmonton have experienced modest average residential sale price increases in 2017. In Calgary, the average residential sale price rose by approximately two per cent, to $487,931 up from $478,100 in 2016. Buyers and sellers remain relatively tentative, but the city's ongoing evolution into a major tech and distribution hub, as seen with Amazon's recent announcement that Calgary will house one of the company's key distribution centres, is expected to increase confidence in the real estate market moving forward. In Edmonton, sales rose by an estimated five per cent year-over-year, from $357,916 to $375,788 in 2017, with a variety of new infrastructure projects, including construction on the Valley Line expansion of the LRT system, expected to contribute to increased activity in the coming years.

The RE/MAX 2018 average residential sale price expectation for Canada is an increase of 2.5 per cent as the desire for home ownership remains strong, particularly among Canadian millennials.

For the full 2018 RE/MAX Housing Market Outlook report, click here.

Data Table

*Source: Historical values are sourced from CREA or local board statistics. Estimates and forecasts are based on the opinion of independent RE/MAX broker/owners and affiliates.

Key Findings from 2018 RE/MAX Housing Market Outlook Omnibus Survey

While home prices across the country continue to increase, home ownership remains important to Canadians. Two-thirds of the population are currently homeowners and just under 50 per cent of Canadians would consider purchasing a property in the next five years. The desire for home ownership remains particularly robust amongst millennials, with 72 per cent of Canadians between 18-34 years old considering purchasing a home in the next five years. Additionally, 20 per cent of homeowners who are considering a purchase in the next 5 years, would consider purchasing a secondary investment property.

1.  66 per cent of Canadians are homeowners

• British Columbia= 62 per cent
• Alberta= 78 per cent
• Saskatchewan and Manitoba= 69 per cent
• Ontario= 68 per cent
• Quebec= 60 per cent
• Atlantic Canada= 65 per cent

2.  48 per cent  of Canadians are considering purchasing a home in the next five years

• British Columbia= 51 per cent
• Alberta= 60 per cent
• Saskatchewan and Manitoba= 43 per cent
• Ontario= 50 per cent
• Quebec= 40 per cent
• Atlantic Canada= 38 per cent

3.  Of the 48 per cent of Canadians considering purchasing a home in the next five years, the top reasons for doing so are:

• Upgrade on their current home= 35 per cent
• To purchase a starter home as a means of entering the housing market= 30 per cent
• Upsize from their current home to accommodate a change in family make-up= 27 per cent

51 per cent of British Columbians are considering purchasing a home in the next five years, the top reasons for doing so are:

• Upgrade on their current home= 36 per cent
• Downsize from current home= 27 per cent
• To purchase a starter home as a means of entering the housing market= 27 per cent

60 per cent of Albertans are considering purchasing a home in the next five years, the top reasons for doing so are:

• Upgrade on their current home= 40 per cent
• Upsize from their current home to accommodate a change in family make-up= 30 per cent
• Downsize from current home= 24 per cent

43 per cent of Saskatchewan/Manitoba residents are considering purchasing a home in the next five years, the top reasons for doing so are:

• Downsize from current home= 37 per cent
• Upgrade on their current home= 31 per cent
• To purchase a starter home as a means of entering the housing market= 23 per cent

50 per cent of Ontarians are considering purchasing a home in the next five years, the top reasons for doing so are:

• Upgrade on their current home= 36 per cent
• Downsize from current home= 28 per cent
• To purchase a starter home as a means of entering the housing market= 28 per cent

40 per cent of Quebec residents are considering purchasing a home in the next five years, the top reasons for doing so are:

• To purchase a starter home as a means of entering the housing market= 39 per cent
• Upsize from their current home to accommodate a change in family make-up= 35 per cent
• Upgrade on their current home= 32 per cent

38 per cent of Atlantic Canadians are considering purchasing a home in the next five years, the top reasons for doing so are:

• To purchase a starter home as a means of entering the housing market= 43 per cent
• Upsize from their current home to accommodate a change in family make-up= 28 per cent
• Upgrade on their current home= 23 per cent

4.  90 per cent of Canadian households with children would prefer to live in a home with a backyard and 79 per cent would prefer to live in a single-family detached home compared to other property types

5.  73 per cent of Canadians would prefer to live in a detached home compared to just 27% that prefer a townhome and 24 per cent that would prefer a condo

6.  37 per cent of Canadians are not aware of the OSFI stress test regulation changes or how they will affect their ability to purchase a property in the future, while 58% of Canadians are aware of the new OSFI stress test regulations. Of this group that is aware of the changes:

• 27% don't believe it will impact the type of property they purchase in the future
• 18% believe it will impact the type of property they purchase in the future
• 13% are unsure of how the new regulations will affect their ability to purchase a property

About the RE/MAX Network:

RE/MAX was founded in 1973 by Dave and Gail Liniger, with an innovative, entrepreneurial culture affording its agents and franchisees the flexibility to operate their businesses with great independence. Over 115,000 agents provide RE/MAX a global reach of more than 100 countries and territories. RE/MAX is Canada's leading real estate organization with more than 21,000 Sales Associates and over 922 independently-owned and operated offices nationwide. RE/MAX, LLC, one of the world's leading franchisors of real estate brokerage services, is a subsidiary of RE/MAX Holdings, Inc. (NYSE:RMAX). With a passion for the communities in which its agents live and work, RE/MAX is proud to have raised more than $150 million for Children's Miracle Network Hospitals^® and other charities. For more information about RE/MAX, to search home listings or find an agent in your community, please visit www.remax.ca.

About RE/MAX INTEGRA and RE/MAX INTEGRA, Ontario-Atlantic Canada      

RE/MAX INTEGRA, founded in 1980, is a privately held company by Canadian entrepreneurs. With regional headquarters in Toronto, Boston, Minneapolis, Indianapolis, Zug, and Vienna, RE/MAX INTEGRA represents nearly a third of all RE/MAX Sales Associates worldwide. The company was founded on the premise of providing outstanding service and support both at the regional level and to the end consumer. 6 The Ontario-Atlantic Canada region has surpassed 10,000 quality Associates; The US regions ? New England and the Midwest (including the following states: Minnesota, Wisconsin and Indiana) ? account for more than 6,400 Associates with over 2,600 and 3,800 Associates respectively; and the European region leads with more than 16,000 Associates. For more information about RE/MAX INTEGRA, visit www.remaxintegra.com

About Leger

Leger is the largest Canadian-owned full-service market research firm. The survey of 1,560 Canadians was completed online between Nov. 13 and Nov. 16, 2017, using Leger's online panel, LegerWeb. Leger's online panel has more than 475,000 members nationally ? with between 10,000 and 20,000 new members added each month, and has a retention rate of 90%. A probability sample of the same size would yield a margin of error of +/- 2.5%, 19 times out of 20.

Forward-Looking Statements 

This press release includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as "believe," "intend," "expect," "estimate," "plan," "outlook," "project" and other similar words and expressions that predict or indicate future events or trends that are not statements of historical matters. These forward-looking statements include statements regarding housing market conditions and the Company's results of operations, performance and growth. Forward-looking statements should not be read as guarantees of future performance or results. Forward-looking statements are based on information available at the time those statements are made and/or management's good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Such risks and uncertainties include, without limitation, (1) changes in business and economic activity in general, (2) changes in the real estate market, including changes due to interest rates and availability of financing, (3) the Company's ability to attract and retain quality franchisees, (4) the Company's franchisees' ability to recruit and retain real estate agents and mortgage loan originators, (5) changes in laws and regulations that may affect the Company's business or the real estate market, (6) failure to maintain, protect and enhance the RE/MAX and Motto Mortgage brands, (7) fluctuations in foreign currency exchange rates, as well as those risks and uncertainties described in the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") and similar disclosures in subsequent SEC filings. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Except as required by law, the Company does not intend, and undertakes no duty, to update this information to reflect future events or circumstances.

SOURCE RE/MAX