The coming new year looks bright for Canada’s housing market. Unless you’re wishing for more affordable housing options, in that case, you won’t like what the latest forecasts say.
Yet, everyone can look forward to lower mortgage rates and help for first-time buyers to help boost the housing market.
Here are the latest predictions for property prices in Canada as we head into 2020.
House prices to go up
Capital Economics reports that momentum is building in house price growth. By March 2020, houses will be increasing in prices at an annual rate of 6%.
The CMHC believes it will be the strength of Ontario, Quebec and B.C. markets that will be responsible for the upward drive of house prices while other parts of Canada will only see modest gains. This same report stated that the average price of a home in Metro Vancouver in 2020 could reach a record high of $983,000.
A separate forecast by Re/Max tells us we can expect a 3.7% increase in house prices across Canada in 2020, with Toronto prices rising 6% (almost double the 2019 pace).
The most recent Reuters poll of 18 economists predicted average national house prices to rise 3.0% next year and 2.9% in 2021. This rise means growth over current inflation but still not a boom as we saw in 2017.
At the start of 2019, rates for a five-year fixed-rate mortgage were around 3.5% at the major banks. As we head into 2020, rates are hovering around 2.45 according to RateSpy. Lower interest rates mean that Canadian homebuyers can afford to pay more for a home than they could in 2019. That’s great news for those looking to buy.
More home sales
CMHC predicts that anywhere from 480,600 to 497,700 homes will sell in 2020. That’s 6% more home sales than in 2019.
Another thing to look at when talking about property prices is how many houses are selling versus how many new houses are soon coming to the market. This is called a sales-to-new-listing ratio. The higher the ratio, the bigger the price growth we’re likely to see.
According to data from the Canadian Real Estate Association, the sales-to-new listing ratio was 63.7% for the country as a whole in October, which is up from the 54% long-run average. Sales surges in B.C. and Ontario are predicted for 2020 through 2021. This is largely due to disposable income increases in both provinces.
The Re/Max survey found that 51% of Canadians are considering buying a property in the next five years. At the same time last year, the number was only 36%.
Stability in new home builds
New home buildings have declined sharply after hitting a 10-year high in 2017. In 2020 and 2021, the CMHC says Canada will see the same number of homes as 2019. This means that the majority of home sales coming our way will be resale properties versus new construction.
All things considered, the coming year looks prosperous for Canada’s housing market and those looking to both buy and sell.
Share your thoughts in the comments.