Picture the GIF of the “slow clap.” It’s what Royal LePage’s CEO Phil Soper is essentially doing to federal party leaders after hearing their election promises in addressing Canada’s housing affordability crisis. With the results of a new Royal LePage House Price Survey released today, he says the downturn in the housing market of 2018 and early 2019 is essentially over – but that concrete plans and action must address its inadequacies.
"It is encouraging to see our political leaders devote thought and time to housing issues during the federal election," said Phil Soper, president and CEO, Royal LePage. "With the fastest growing population among advanced economies worldwide, providing adequate shelter for Canada's rapid pace of household formation presents an economic opportunity and a social challenge.
"Careful stewardship of the real estate industry and its related financial sector is critical for the health of the country's economy and the personal wealth of Canadian families," Soper continued.
"Well-intentioned election promises aimed at making housing more accessible and affordable to first-time buyers will fall flat if they trigger a surge in demand without a corresponding increase in the supply of homes. For example, lowering monthly mortgage payments by stretching repayment over a longer time period looks great on the surface, yet a surge in new buyers could cause prices to escalate, erasing the enhanced purchasing power."
And the stats of growth back up his claims. The national aggregate price of housing has been forecast to rise 1.5% during the fourth quarter of 2019 compared to same period in 2018. Another shocking fact is that the price gap between condominiums and houses shrinks as the median condo price in the City of Toronto surpasses $600,000 mark.
Meanwhile the median price of a two-storey home in the city centre rose 5.5 per cent. So, while the mortgage stress test once managed to slow down the market – demand has swelled to the point where the test is no longer creating an obstacle. Royal LePage predicts the price of a home in the Greater Toronto Area to be relatively flat quarter-over-quarter at $859,301, which is a 3.1 per cent increase over the fourth quarter of 2018.
"Low interest rates and an outstanding employment picture continue to buoy consumer confidence and support our recovering real estate market," said Soper. "The collateral damage from the trade war between the U.S. and China has been manageable to date. Barring a full-blown American recession, our outlook for Canada's housing sector is for continued market expansion."
Whoever ends up winning the election will have to deliver on the home front ‑ pun intended!