Canadian home prices eked out a small gain in 2023 and are forecast to rise again in 2024 and 2025, according to figures and projections from the Canadian Real Estate Association that also showed a promising jump in sales to close out the year.
The organization’s MLS Home Price Index (HPI) ended the year 0.7 per cent higher than last December, despite a 0.8 per cent month-over-month drop from November. The benchmark price was also up, rising less than one per cent for the year to $730,400. Average sale prices, meanwhile, showed stronger gains and are up 5.1 per cent from December 2023 to $657,145.
A jump in sales in December — up 8.7 per cent month over month and 3.7 per cent from last December — may fuel some optimism heading into the new year.
Shaun Cathcart, CREA’s senior economist, said it’s still too early to tell if this is a sign of what’s to come for 2024.
“Was the December bounce in home sales the start of the expected recovery in Canadian housing markets? Probably not just yet,” Cathcart said in the Jan. 15 market report. “It was more likely just some of the sellers and buyers that were holding onto unrealistic pricing expectations last fall finally coming together to get deals done before the end of the year. We’re still forecasting a recovery in housing demand in 2024, but we’ll have to wait a few more months to get a sense of what that ultimately looks like.”
Marc Desormeaux, principal economist at Desjardins was also cautious about reading too much into a single strong increase in sales.
“Ultimately, today’s release doesn’t change our view that the Bank of Canada is done hiking, and will begin cutting by the middle of this year,” he wrote. “The Bank of Canada should put more weight on the softness seen in recent months, as well as mounting evidence that the Canadian economy is weakening amid sharply higher borrowing costs.”
Karen Yolevski, chief operating officer of Royal LePage Real Estate Service Ltd, said as activity picks up, it will give a better sense of what has been motivating both buyers and sellers.
“As we see people come off the sidelines, we’re going to have a better understanding of whether people are or were simply waiting to time the market and waiting for interest rates to go down to return to the market,” she said.
In its 2024 housing forecast, CREA said the interest rate picture will remain a significant factor through 2024 and 2025.
CREA forecasts a 2.3 per cent rise in the national average home price to $694,173 in 2024, with Alberta, Quebec, New Brunswick, Nova Scotia and Newfoundland and Labrador exceeding this level. Meanwhile, British Columbia and Ontario’s markets are expected to stabilize with flat home prices.
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About 489,661 residential properties are expected to be sold through Canadian MLS Systems in 2024, marking a 10.4 per cent rise from 2023.
In 2025, Canadian national home sales are expected to increase by 7.3 per cent to 525,498 units as interest rates decline toward neutral levels. This figure, however, remains below the long-term trend. The national average home price is projected to grow four per cent to $722,063, driven by strengthening demand and persistent supply limitations. Alberta and the East coast are anticipated to exceed other regions in price growth.
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