Royal LePage projects aggregated home prices in the Greater Toronto Area (GTA) could increase by as much as 4% in the fourth quarter of 2020, a notable uptick from the 1.5% increase that was initially predicted at the end of the first quarter.

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On Thursday, the Canadian real estate brokerage released its House Price Survey and Market Survey Forecast, which revealed that the new forecast is based on the 10% year-over-year growth to $899,001 in aggregate GTA home prices from the second quarter of this year.

When broken down by housing type, the median price of a standard two-storey home increased 10.7% year-over-year to $1,050,323 in the second quarter, and the price of a bungalow rose 6.4% year-over-year to $852,260. During the same period, condominiums in the region continued to see strong price appreciation, with the median price rising 9.3% year-over-year to $599,235.

In the latest report from the Toronto Regional Real Estate Board (TRREB) released on Tuesday, home prices in Toronto-proper already hit an all-time high.

READ: Toronto Home Sales and Prices Soar in June as Buyers Embrace Stage 2

Kevin Somers, Chief Operating Officer, Royal LePage Real Estate Services Limited, says prior to the market disruption caused by the pandemic, the GTA was on track for double-digit price growth in 2020.

"While the first half of the second quarter saw market activity severely curtained, as soon as the market woke up in late May, sales quickly accelerated,” said Somers. “However, with listings not keeping pace and buyer competition high, we are again seeing double digit-price appreciation in the region.”

As such, Royal LePage says it's now forecasting that the aggregate price of a home in the GTA will increase by 4% in the fourth quarter of this year compared to the same quarter in 2019.

“While buyer demand outstripping inventory has been typical of the Toronto market, the return of buyers before sellers in the second half of the quarter amplified price growth,” said Somers. “Sellers are now returning and while buyers should not expect bargains, they may find the second half of the year more reasonable for inventory and price appreciation.”

On a national level, Royal Le Page says the aggregate price of a home increased 6.8% year-over-year to $673,072 in the second quarter. This increase can be attributed to provinces reopening and activity in the real estate market resuming, which led to demand surging in many markets and in turn, inventory levels, which were already constrained pre-pandemic, have failed to keep pace.

When broken down by housing type, the median price of a two-storey home rose 8.% year-over-year to $794,392, while the median price of a bungalow increased 3.9% to $550,289. The median price of a condominium increased 5.3% year-over-year to $503,983.

“Home prices shot up in the second quarter as a crush of buyers entered the market, attracted by extremely low interest rates and the perception of bargains to-be-had,” said Phil Soper, President and CEO of Royal LePage. “Across Ontario, Quebec and British Columbia in particular, the demand for housing outpaced the growth in supply, particularly in the early weeks post-lockdown. The surge in the number of first-time buyers was felt acutely, as these housing consumers soaked up supply without contributing to it.”

As more homeowners return to the market to sell their properties, inventory levels will inevitably rise, relieving the acute upward pressure on home prices that characterized the supply-constrained second quarter of 2020.

Royal LePage added that while the recovery of Canada's real estate market remains uncertain, it predicts that national aggregate prices will increase 2.3% in the fourth quarter compared to the same period in 2019.