Property prices should stabilize in 2023, says Royal LePage

The real estate firm Royal LePage predicts that the median price of single-family homes in the country will decrease by 2% by the last quarter of 2023, and that that of condominiums will increase by 1% during the same period. After the last few months, marked by a significant drop in real estate prices, the firm therefore expects the market to stabilize in 2023.

“The price variations recorded in the past year have been the most volatile we’ve seen in a long time,” says Dominic St-Pierre, vice-president and general manager, Quebec at Royal LePage. We had experienced such price drops only twice in the last 75 years in the Montreal market. »

In fact, the median price of a single-family home had fallen by nearly 10% for the period including the months of July, August and September 2022 compared to the previous three months, going from $448,694 to $400,000, reported The duty last October.

“After nearly two years of record price appreciation, fueled by a rapid increase in household savings, ultra-low borrowing costs and a deep-seated desire for more space during the COVID-19 pandemic , the frenzied housing market got carried away and the inevitable price slide, or market correction, began, intensified by rapidly rising financing rates,” said Phil Soper, President and CEO of Royal LePage, in a news release.

The recent price declines are due in particular to the successive increases in interest rates caused by increases in the Bank of Canada’s key rate, intended to counter inflation, which are slowing down demand from potential buyers. Royal LePage points out, however, that many other factors point to a stabilization of prices in 2023, when one could wrongly expect a further decline due to the still high interest rates.

“Severe housing shortage”

Among the factors mitigating the drop in prices, Royal LePage notes a “serious housing shortage” currently rife in Canada. Mr. St-Pierre notes, however, that the said shortage is a little less marked in Quebec than in British Columbia or Ontario, for example.

“The number of properties for sale must exceed demand for prices to come down significantly,” reads a statement from Royal LePage. […] Smaller households mean that more [logements] are needed per capita than in the past. Pent-up demand is being intensified by buyers who might buy, but [qui] choose to wait in these turbulent times. »

The price variations recorded in the past year have been the most volatile we have seen in a long time. We had experienced such price drops only twice in the last 75 years in the Montreal market.

The firm also notes that the low unemployment rate means that “few families should need to sell their homes for financial reasons.” The savings of Canadian households remain “above historical standards”, according to Royal LePage, which allows them to “cross the obstacles of the down payment more easily”.

Mr. St-Pierre qualifies these statements, however, and adds that today, “people save between 3% and 5% of their income”, compared to “16 to 18%” during the pandemic. “We understand why people got carried away during the pandemic, he says, but with inflation, it won’t last. »

Slight difference for Montreal

Royal LePage forecasts that the price of all property types appraised in Canada will decline by 1% in the fourth quarter of 2023 compared to the same period in 2022. In Montreal, the decline is estimated at 2%, with a decline of 2.5% for single-family homes and 1.5% for condominiums.

Property prices should continue to fall slightly until the first quarter of 2023, then increase until the end of the year, which would mark the stabilization of the market.

“Rising borrowing costs, the cost of living and, more recently, municipal taxes, combined with less vigorous demand, should continue to put downward pressure on prices in 2023 in the greater Montreal,” said Mr. St-Pierre.

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