GTA home prices to see biggest gains in 2024 as Canada's housing market set for 'uncomfortably busy' fall: Royal LePage

Housing prices in the GTA are expected to rise 10 per cent this year and will likely surpass those in Greater Vancouver by the end of 2024, according to an updated forecast by Royal LePage.

In its latest survey, the brokerage said it was upgrading its national year-end home price forecast after a “stronger-than-expected first quarter.”

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Royal LePage said it now expects the national aggregate home price to rise nine per cent year-over-year in the fourth quarter of 2024, up from its previous forecast of 5.5 per cent.

“Consistent with our previous forecast, the market did reach a critical tipping point in the first quarter of 2024, when home prices bottomed out and began to appreciate again. Clearly, more and more buyers are motivated by the need to get ahead of rising home prices, rather than adopting the strategy of waiting for mortgage rates to fall,” Phil Soper, president and CEO of Royal LePage, said in a written statement.

“Once the central bank does make a move, and that first highly-anticipated cut to rates is made, even if it is only by 25 basis points, I expect we will see the price appreciation curve steepen upwards when the highly rate-focused crowd jumps into the market.”

The GTA, the report noted, is expected to see the greatest price appreciation of all major markets in Canada in 2024.

In the first quarter of 2024, home prices in the GTA increased 5.2 per cent year-over-over to $1,177,700.

The median price of a single-family detached home rose 3.9 per cent year-over-year to $1,454,800 in the first quarter of 2024, while the median price of a condo increased 3.7 per cent to $733,600.

A for sale sign is displayed in front of a house in the Riverdale area of Toronto on Wednesday, September 29, 2021. THE CANADIAN PRESS/Evan Buhler

“The first three months of the year were busier than expected in Toronto and the surrounding regions,” Karen Yolevski, chief operating officer of Royal LePage Real Estate Services Ltd., said in analysis accompanying the survey.

“Warm winter weather and the anticipation of tight competition once the Bank of Canada reverses course on part of its steep interest rate hike campaign have prompted some buyers who had been sidelined last year to re-enter the market with a renewed sense of purpose.”

While the report notes that home prices have “not yet fully recovered from the post-pandemic correction” in most regions, the national aggregate home price is “well above” pre-pandemic levels.

According to data from the Toronto Regional Real Estate Board (TRREB), the average selling price of a Toronto home across all property types peaked at $1,334,062 in February 2022 before dropping to a low of $1,037,542 later in the year.

GTA may soon be Canada's most expensive housing market

The brokerage previously expected Calgary to see the greatest increase in home values this year but has since moved Toronto to the top of the list, followed by Montreal, where home prices are forecast to increase by 8.5 per cent year-over-year in the fourth quarter of 2024.

“Last year, while property values dipped in most markets across the country, the Calgary real estate market bucked the trend and continued to record home price gains. While activity levels remain strong and prices continue to rise in Alberta, our research indicates that buyer demand, relative to available inventory, is strongest in the two largest urban centres in the country. We now expect Toronto and Montreal to log the highest home price appreciation this year,” Soper added.

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Rising prices in Toronto, Royal LePage said, will likely “close the gap” between Canada’s two most expensive real estate markets.

“While Vancouver remains the nation’s most expensive market today, Royal LePage predicts that the aggregate price of a home in the GTA will surpass Greater Vancouver in the second half of 2024,” the report notes.

'Rapidly transitioning away from a buyers' market'

Soper said the strong start to the year points to a “normally busy spring market” leading to “an uncomfortably busy fall.”

“It is clear we are rapidly transitioning away from a buyers’ market and back to an environment where the seller has the upper hand,” Soper said.

He noted that interest rate decreases will not be the “primary driver” of rising home prices.

“While real estate boards across the country are reporting a boost in listings, which is typical as we head into the spring market rush, just about every region from coast to coast remains chronically short of housing supply,” Soper said.

“While we expect that interest rate decreases will draw more buyers back into the ring, this will not be the primary driver of rising home prices – it is the severe shortage of housing in markets small and large in virtually every part of the country that remains the main culprit."