Real estate rebound: Canada's sluggish housing markets in recovery mode following third straight interest rate cut

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Further rate decreases expected to set the stage for an early spring market

Third-quarter highlights:

  • The national aggregate home price rose a modest 1.6% year over year in Q3 2024, and decreased 1.1% over Q2.

  • Greater Montreal's aggregate home price increased 5.2% year over year, while the greater Toronto and Vancouver markets showed little change, rising 0.7% and 0.5%, respectively.

  • For the second consecutive quarter, Quebec City recorded the highest year-over-year aggregate price increase (10.5%) in Q3 among the report's major regions.

  • Major markets in the prairie provinces continue to show resilience and strength, as tight supply pushed prices upward in Q3.

  • Royal LePage? expects home prices to remain stable through Q4; forecasts pull-ahead of spring market on expectation of continued easing of lending rates.

TORONTO, Oct. 10, 2024 /CNW/ - According to the Royal LePage House Price Survey released today, the aggregate1 price of a home in Canada increased 1.6 per cent year over year to $815,500 in the third quarter of 2024. On a quarter-over-quarter basis, however, the national aggregate home price decreased 1.1 per cent, following sluggish activity in most – though not all – markets through the summer months. Coast to coast, sales volumes began to pick up in September, and more than one third (38%) of regional markets covered in the report recorded positive aggregate price gains in the third quarter over the previous quarter.

"Despite three cuts to the Bank of Canada's overnight lending rate, buyer demand nationally remains weak, particularly among two key groups: first-time homebuyers and small investors," said Phil Soper, president and chief executive officer, Royal LePage. "First-time buyers, who are more sensitive to interest rates, are adopting a wait-and-see attitude. With home prices essentially flat and interest rates steadily declining, they perceive no penalty in postponing their purchase.

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1 Aggregate prices are calculated using a weighted average of the median values of all housing types collected. Data is provided by RPS Real Property Solutions and includes both resale and new build.

"Similarly, small investors who typically buy condominiums to rent out and supply much of Canada's rental housing, are also hesitant. Elevated rates have made the financials unworkable, with carrying costs surpassing rental income. While historically some landlords accept negative cash flow temporarily when properties are appreciating in value, the current flat prices do not justify many investments," said Soper. "We believe that both groups will re-enter the market in significant numbers as property values begin to rise again. With further rate cuts from the Bank of Canada likely this year, we anticipate prices will appreciate more quickly, eliminating the advantages of waiting for first-time buyers and making calculations more favourable for investors.