GTA home prices still forecast to rise 11 per cent in 2022 even with expected interest rate hikes: Royal LePage
Real estate brokerage Royal LePage says that the expected rise in interest rates in 2022 “may not be enough to offset the significant upward price pressure” on homes, especially in the Greater Toronto Area where it expects the cost of the average property to go up by double-digits once again.
The brokerage said that the aggregate price of a home in the Greater Toronto Area increased by 17.3 per cent in 2021 to $1,119,800 as demand continued to outpace supply.
It is forecasting that in 2022 prices in the GTA will rise by another 11 per cent, with the aggregate home price reaching $1,243,000 by the fourth quarter.
The forecasted price growth comes despite market expectations that the Bank of Canada could raise interest rates up to five times in 2022, significantly increasing the cost of borrowing.
“It isn't sustainable. The good news, if you could call it that, is we see all prices rising at about half the rate they did in 2021 in the months ahead so while home prices continue to be more expensive the rate at which they're getting more expensive is falling,” Royal LePage President and CEO Phil Soper told CP24 on Friday morning. “We will find things return to normal appreciation levels sometime in the future, my guess is by 2023 we will be back into single-digit increases, which is what we have come to expect in the city and across the country over the decades.”
The Bank of Canada’s overnight lending rate has been at its effective lower bound of 0.25 since early on in the COVID-19 pandemic but with inflation surging and employment numbers back to their pre-pandemic norms the central bank is expected to begin a cycle of rate hikes in the coming months.
Soper said that when that happens it will effectively make homes more expensive and “some people will get priced out of the market.”
But he said that it likely won’t be enough to tame rising housing prices, given the lack of supply.
“We’ve been building to this lack of supply for years unfortunately and it really came to a head during the pandemic when there was such hyper focus on our homes,” he said. “People were saving money. They were not travelling, they weren’t going out to restaurants and they redirected that money, a lot of it, into their living conditions.”
Royal LePage says that in 2021 the median price of a detached home in the Greater Toronto Area increased 22.4 per cent to $1,421,200 while the median price of a condominium increased 14.8 per cent to $665,400.
Soper, however, said that price growth in condos could outpace detached homes in 2022 due to the “growing gap” in prices, at least in the GTA.
CTVNews.ca Top Stories
NEW From yearning for a change to cost of living, why some Canadians have left or may leave the country
For some immigrants, their dreams of permanently settling in Canada have taken an unexpected twist.
NEW Capital gains tax change 'shortsighted' and 'sows division' business groups tell Freeland
Forging ahead with increasing Canada's capital gains inclusion rate 'sows division,' and is a 'shortsighted' way to improve the deficit, business groups are warning Finance Minister Chrystia Freeland.
Here are the ultraprocessed foods you most need to avoid, according to a 30-year study
Studies have shown that ultraprocessed foods can have a detrimental impact on health. But 30 years of research show they don’t all have the same impact.
Police handcuff man trying to enter Drake's Toronto mansion
Toronto police say a man was taken into custody outside Drake's Bridle Path mansion Wednesday afternoon after he tried to gain access to the residence.
What is whooping cough and should Canadians be concerned as Europe declares outbreak?
There is currently a whooping cough epidemic in Europe, with 10 times as many cases compared to the previous two years. While an outbreak has not been declared nationwide in Canada, whooping cough is regularly detected in the country.
Ontario man frustrated after $3,500 paving job leaves driveway in shambles
An Ontario man considering having his driveway paved received a quote from a company for $7,000, but then, another paver in the neighbourhood knocked on his door and offered half that rate.
Florida deputies who fatally shot U.S. airman burst into wrong apartment, attorney says
Deputies responding to a disturbance call at a Florida apartment complex burst into the wrong unit and fatally shot a Black U.S. Air Force airman who was home alone when they saw he was armed with a gun, an attorney for the man's family said Wednesday.
Air Canada ranks near bottom on customer satisfaction: survey
Air Canada ranks below most other major North American airlines on customer satisfaction, with airfares a particular sore point, according to a new survey.
U.S. presidential candidate RFK Jr. had a brain worm, has recovered, campaign says
Independent U.S. presidential candidate Robert F. Kennedy Jr. had a parasite in his brain more than a decade ago, but has fully recovered, his campaign said, after the New York Times reported about the ailment.