(Toronto) Even as expectations of lower interest rates are drawing more buyers back into the housing market, a new report says the Bank of Canada’s quarter-percentage-point cut to its key interest rate last month hasn’t led to a big boost in demand.
Royal LePage’s latest analysis of home prices, released Thursday, details market trends across Canada in the second quarter. It shows demand continues to outpace supply in Quebec and the Prairies, but activity in Toronto and Vancouver has been slower than usual this spring.
Royal LePage president and CEO Phil Soper noted that prices have remained stable in Canada’s largest markets.
This spring, when interest rate cuts were highly anticipated, we saw some buyers rush to close a transaction before an anticipated spike in demand.
Royal LePage President and CEO Phil Soper
“Yet when the first decline finally came in early June, the market reaction was lukewarm,” he noted.
A Léger poll commissioned by Royal LePage earlier this year suggested that 51 per cent of potential buyers would resume their search when interest rates fell, but only 10 per cent said a 25 basis point cut would prompt them to return to the market.
About 18% of respondents said they expected a rate cut of 50 to 100 basis points, while 23% warned they would need a cut of more than 100 basis points.
“It’s not surprising that the bank’s quarter-point interest rate cut has not substantially improved the affordability situation,” Soper said.
“The story the market will tell when rate cuts translate into a substantial reduction in the cost of borrowing should be very different.”
The overall national home price rose 1.9% year over year to $824,300 in the second quarter, also up 1.5% from the first quarter.
These statistics are compiled from the company’s national and regional real estate data in 64 of Canada’s largest real estate markets.
Broken down by housing type, the median price of a single-family home increased 2.2% year-over-year to $860,600, while the median price of a condominium increased 1.6% to $596,500.
Royal LePage forecasts that the overall price of a home in Canada will increase by 9% to $860,555 in the fourth quarter of 2024 compared to the same quarter last year.