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
4th Indian national arrested, charged with murder of Hardeep Singh Nijjar
Homicide investigators in B.C. say murder charges have been laid against a fourth Indian national in connection to the killing of Sikh activist Hardeep Singh Nijjar outside a Surrey gurdwara last year.
Man ticketed after allegedly trespassing again at Drake's Bridle Path mansion to get his bike
A man who tried to access Drake’s Bridle Path mansion earlier this week returned to the property Saturday and was apprehended again for allegedly trespassing, Toronto police say.
Switzerland's Nemo wins 68th Eurovision Song Contest
Swiss singer Nemo won the 68th Eurovision Song Contest on Saturday night with 'The Code,' an operatic ode to the singer’s journey toward embracing their nongender identity.
Wildfire that forced evacuation of Fort Nelson, B.C., caused by tree falling on wires, mayor says
The wildfire that prompted the evacuation of more than 3,000 people near Fort Nelson, B.C., was caused by a tree falling on wires, according to the municipality's mayor.
Couple randomly attacked, 1 stabbed, by group of teens in Toronto, police say
A man has been transported to hospital after police say he was stabbed in a random attack carried out by a group of teens in Toronto on Friday night.
Israel orders new evacuations in Gaza's last refuge of Rafah as it expands military offensive
Israel ordered new evacuations in Gaza's southern city of Rafah on Saturday, forcing tens of thousands more people to leave as it prepared to expand its military operation deeper into what is considered Gaza’s last refuge.
'I am angry': Alberta farmers will continue fight over world class motorsport resort
The rolling hills leading to the hamlet of Rosebud are dotted with sprawling farms and cattle pastures -- and a sign sporting a simple message: No Race Track.
IN PICTURES Northern lights dance across the night sky in southern Ont.
From London, to Grand Bend, Collingwood and Guelph, here are some highlights of Friday night and Saturday morning's northern lights display.
Ron Ellis, who played over 1,000 games with Maple Leafs, dead at 79
Ron Ellis, who played over 1,000 games with the Toronto Maple Leafs and was a member of Canada's team at the 1972 Summit Series, has died at age 79.