Redistribution of Canada’s Workforce Drives Further Price Appreciation in Greater Vancouver and the Greater Toronto Area
Greater Montreal Area sees signs of a real estate market revival in the first quarter of 2016
TORONTO, April 7, 2016 – According to the Royal LePage House Price Survey[1] released today, Canada’s residential real estate market showed strong year-over-year price increases in the first quarter of 2016. The Greater Vancouver and Greater Toronto Area (GTA) real estate markets continue to lead the country in home price appreciation, with Canada’s economic landscape supporting robust housing demand in these metropolitan areas. Additionally, an emerging trend of inter-provincial migration to British Columbia and Ontario from commodity-focused economic regions such as Alberta is expected to put further upward pressure on home prices in these areas in the coming months. Meanwhile in Quebec, the residential real estate market in the Greater Montreal Area is showing the most promising signs of renewal seen in recent years, posting home price increases and a noticeable surge in unit sales in the first quarter.
The Royal LePage National House Price Composite, compiled from proprietary property value data in 53 of the nation’s largest real estate markets, showed that the price[2] of a home in Canada increased 7.9 per cent year-over-year to $512,621 in the first quarter of 2016. The price of a two-storey home rose 9.2 per cent year-over-year to $629,177, and the price of a bungalow increased 6.8 per cent to $426,216. During the same period, the price of a condominium increased 4.0 per cent to $344,491.
“A glance at our national house price composite points to a very strong Canadian real estate market, yet the findings contain extreme regional disparities of the kind we haven’t seen in over a decade,” said Phil Soper, president and CEO, Royal LePage. “Like an economic triumvirate, the impact of rock-bottom interest rates, the low Canadian dollar and a rapidly expanding U.S. workforce are stimulating economic growth and housing demand in our largest metropolitan areas. Conversely in cities like Calgary, the ongoing drags in depressed energy prices and worrisome employment trends have taken a material bite out of sales volumes. As a lagging indicator, home prices in Alberta and Newfoundland are just beginning to adjust to the lower demand.”
In Alberta, year-over-year home price declines have trailed the drops in sales volumes that began in 2015, but are now starting to emerge in varying degrees across the province. Calgary, with its large population of oil company head-office professionals and less affordable housing, is expected to see more of a price adjustment during the year than will be seen in Edmonton, where prices remain relatively flat. In contrast, the GTA and Greater Vancouver markets are skewed in favour of the seller, with a shortage of inventory and growing demand putting upward pressure on prices.
“Redistribution of labour across the country is further reinforcing disparities among housing markets, as the broader impacts of the oil recession on Alberta’s economy take hold. For the first time in many years, we are witnessing an out-migration trend in the province, as economic conditions and employment prospects dim,” continued Soper. “We expect British Columbia, followed by Ontario, to be the top recipients of new household inflows in the coming year, which will further fuel housing demand and price appreciation in Greater Vancouver and the GTA. This is in sharp contrast to the situation from 2011 to 2014, and in the mid 2000’s, when a booming energy sector attracted families from all over Canada to Alberta.”
The Royal LePage survey also showed a noticeable divergence between Canada’s two hottest markets: while the GTA sustained its trajectory of an aggregate year-over-year home price increase in the 8 per cent range (8.4 per cent), the Greater Vancouver market accelerated at rarely seen appreciation levels, surpassing a 20 per cent (21.6 per cent) aggregate year-over-year home price increase for the region.
During the first quarter, the Greater Montreal Area real estate market saw signs of renewal, including a dramatic increase in home sales activity, which rose 9.4 per cent year-over-year. In the luxury segment, when looking at condominiums in the $500,000 to $1-million range on the island of Montreal, the year-over-year increase in sales volume jumped to 23 per cent for the quarter and for homes over $1-million, sales volume increased 14 per cent year-over-year. With adequate supply to meet this increased demand, home prices showed moderate growth, posting a 1.8 per cent year-over-year aggregate price increase in the region.
“Following a multi-year period of stalled economic and residential real estate market growth, the Greater Montreal Area is seeing a frankly wonderful upswing in demand and unit sales, which often foreshadows stronger home price appreciation,” said Soper. “While Quebec has been slower to reap the economic benefits of more affordable energy costs in addition to the big three factors driving markets elsewhere in Canada – low interest rates, a lower dollar and expanding U.S. economy – the region is turning a corner. My vote goes to Montreal as the city most likely to exceed expectations in 2016.”
In addition to low interest rates, the low dollar, and an expanding U.S. economy, in the coming year, Montreal’s housing market is expected to gain traction as a result of strong export performance driven by a steady recovery in the manufacturing and services sectors. Large infrastructure projects such as work on the Champlain Bridge and on the Turcot Interchange are also expected to contribute to local employment, with the Conference Board of Canada[3] projecting that these two projects alone will reverse three years of decline in Montreal’s construction sector.
“The mood is shifting in Quebec amid a renewed era of political stability and economic promise,” added Soper. “This year we expect to see improved business and consumer confidence in the province, which will result in stronger demand for larger purchases such as houses. Home buyers are well positioned as housing is much more affordable than in other large business centres such as Vancouver and Toronto.”
Outside of British Columbia and Ontario, year-over-year changes in house prices were generally modest in the first quarter. In Atlantic Canada, Moncton saw the largest gains, posting an aggregate home price increase of 3.4 per cent, while the remainder of the Atlantic regions surveyed saw slight to moderate declines. In other parts of Western Canada, Winnipeg home prices increased 3.8 per cent year-over-year, while Regina and Saskatoon, feeling some of the impact of declines in commodity prices and net-migration, saw slight decreases of 1.1 per cent and 0.3 per cent, respectively.
“The economic miracle that is contemporary Canada is driven in significant measure by our success at attracting quality immigrants to our land. While this is not new news, the possibility of a Donald Trump presidency has put renewed global focus on the often stark differences in opportunity and attitude that exist on either side of our huge border. In what started as a media prank, Canada’s attractiveness as a more realistic place to pursue life, liberty and happiness is gaining traction even in America. While we may just be a curiosity for many in the United States, the Cape Breton advertising campaign urging Americans to move north, as well as the record number of Americans googling ‘how to move to Canada’ reinforces the worldwide strength of brand-Canada as a prosperous and tolerant place to raise a family,” concluded Soper.
Regional Market Summaries
During the first quarter of 2016, the St. John’s housing market remained relatively flat, with the aggregate price of a home in the region showing a modest increase of 0.1 per cent year-over-year to $336,629. The median price of a bungalow in the region rose 0.7 per cent to $311,828, while two-storey homes increased 0.9 per cent year-over-year to $387,762. At the same time, the median price of a condominium fell 9.6 per cent to $270,025.
During the same period, the aggregate price of a home in Halifax fell modestly, slipping 1.2 per cent year-over-year to $304,441. When broken out by housing type, the median price of a bungalow increased 0.7 per cent to $245,672. Two-storey home prices also saw some softness, declining 1.5 per cent year-over-year to $344,592, while the median price of a condominium fell by a larger margin of 6.4 per cent to $257,056.
In the Greater Montreal Area, the housing market saw signs of renewal with the aggregate price of a home in the region rising 1.8 per cent to $342,909. The median price for a bungalow saw a moderate 1.5 per cent increase to $282,266 year-over-year, while two-storey homes saw a 3.3 per cent increase to $444,179. The median price of a condominium remained stable at $279,893 with a 0.9 per cent decrease from the same period last year.
Meanwhile, the aggregate price of a home in Ottawa rose 1.9 per cent year-over-year to $399,594. Two-storey homes saw a steady increase in the median price of 3.2 percent year-over-year to $420,541, while condominiums remained relatively flat, rising 0.1 per cent year-over-year to $316,499. During the same period, the median price of a bungalow declined slightly, slipping 1.3 per cent to $381,875.
Home prices continue to increase significantly in the Greater Toronto Area, with the aggregate price of a home rising 8.4 per cent over the previous year to $613,733. The median price for a two-storey home rose 9.3 per cent year-over-year to $724,901. Bungalows appreciated by 8.7 per cent to $603,353. Condominiums also saw moderate price growth during the quarter, increasing 4.5 per cent to a median price of $366,714.
The housing market in Winnipeg saw a healthy rise in the first quarter of 2016, with the aggregate price of a home climbing 3.8 per cent year-over-year to $300,714. The median price of a two-storey home increased 7.7 per cent to $381,171, while bungalow prices rose 2.0 per cent year-over-year to $268,532. Condominium prices fell 5.7 per cent to $206,571.
An oversupply in Regina’s housing market has caused a modest decline in the aggregate price of a home, which slipped 1.1 per cent year-over-year to $327,618, in the first quarter of 2016. When broken out by housing type, the median price of a condominium fell 3.3 per cent to $275,138. Bungalow prices were down 1.0 per cent year-over-year to $301,261. Two-storey home prices slipped 0.5 per cent to $418,399.
Despite a decline in sales activity in Calgary, prices remained relatively stable in the first quarter, with the aggregate price of a home slipping 0.6 per cent year-over-year to $466,184. The median price of a two-storey home declined 1.0 per cent year-over-year to $518,478, while the median price for a bungalow declined by 0.2 per cent to $463,693. Condominium prices remained relatively flat, increasing 0.3 per cent year-over-year to $307,864.
Despite the impact of declining oil prices on the region, Edmonton saw a moderate increase in the aggregate price of a home, which rose 1.9 per cent year-over-year to $388,184 in the first quarter of 2016. The median price of a two-storey home rose 4.3 percent year-over-year to $472,388, while the median price of a condominium increased 2.2 per cent to $239,996. During the same period, the median price for a bungalow fell 2.0 per cent to $361,007.
Home prices in Greater Vancouver continued to see significant appreciation during the first quarter of 2016, with the aggregate price of a home rising 21.6 per cent year-over-year to $1,044,750. The median price for bungalows in Greater Vancouver surged 25.7 per cent year-over-year to $1,116,136, while two-storey homes climbed 23.6 per cent to $1,418,231. Condominiums also saw notable growth during the quarter, increasing 9.5 per cent to $487,300.
Royal LePage’s quarterly House Price Survey shows the annual change of prices for key housing segments in select national markets.
About the Royal LePage House Price Survey
The Royal LePage House Price Survey provides information on the three most common types of housing in Canada, in 53 of the nation’s largest real estate markets. Housing values in the House Price Survey are based on the Royal LePage National House Price Composite, produced quarterly through the use of company data in addition to data and analytics from its sister company, Brookfield RPS, the trusted source for residential real estate intelligence and analytics in Canada. Commentary on housing and forecast values are provided by Royal LePage residential real estate experts, based on their opinions and market knowledge.
About Royal LePage
Serving Canadians since 1913, Royal LePage is the country’s leading provider of services to real estate brokerages, with a network of over 16,000 real estate professionals in more than 600 locations nationwide. Royal LePage is the only Canadian real estate company to have its own charitable foundation, the Royal LePage Shelter Foundation, dedicated to supporting women’s and children’s shelters and educational programs aimed at ending domestic violence. Royal LePage is a Brookfield Real Estate Services Inc. company, a TSX-listed corporation trading under the symbol TSX:BRE.
For more information visit: www.royallepage.ca.
For further information, please contact:
Gwen McGuire
Kaiser Lachance Communications
416-948-6500
gwen.mcguire@kaiserlachance.com
[1] Powered by Brookfield RPS
[2] Aggregate prices are calculated via a weighted average of the median values of homes for reported property types in the regions surveyed
[3] Conference Board of Canada, Metropolitan Outlook 1: Economic Insights into 13 Canadian Metropolitan Economies: Autumn 2015. Available: http://www.conferenceboard.ca/e-library/abstract.aspx?did=7381
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