Royal Lepage: Due to Unmet Demand, House Prices Will Continue to Rise In 2021

A Royal LePage report stated that due to unmet demand in the second half of 2020 extending into 2021, house prices are expected to rise next year. Canada’s total house prices are expected to increase by 5.5% year-on-year to CAD 746,100. Royal LePage CEO Phil Soper said that the leading indicators point to the upcoming spring market, which will benefit real estate sellers.

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Re/Max said that 84% of brokers expect a seller’s market by 2021 because “family is considering changing lifestyles by relocating to less dense cities and neighborhoods”.

The Royal LePage report presents a similar trend, predicting that the value of single-family houses and houses outside the major urban markets is expected to continue to exceed that of urban core apartments. 

Royal LePage said the median price of two-story houses is expected to rise by 6% to A$890,100, while apartments’ median price is expected to rise by 2.25% to A$52increase. Royal LePage reports that this discrepancy will be driven by Canadians seeking larger housing and broad demographic trends, including baby boomers’ retirement.

Royal LePage said that next year, with the return of international college students and the increase in immigrants’ number, the demand for apartments is “healthy” and the Toronto area may prove to be a “significant exception” to the trend. 

Royal LePage predicts above-average prices in cities including Ottawa (11.5%), Halifax (7.5%), and Vancouver (9%).

Re/Max suggested that Vancouver’s suburban communities (such as Pitt Meadows, Ladner, and Maple Ridge) will perform best next year due to more outdoor space that is affordable and easy to use. Re/Max said that in Halifax, the increase in housing prices might be due to the influx of buyers and promotion buyers from outside the province.”

Although the two brokerage firms are optimistic about the new year, both sets of forecasts were made after a year when the real estate market was not satisfied with expectations. 

Although certain parts of the real estate market, such as the oil-producing province and Toronto’s apartment market, are indeed struggling to keep up, many real estate markets in Canada have reported a record bidding war for home auctions in the second half of 2020.

Re/Max and Royal LePage may suggest that this momentum will continue in the hot market, but not everyone agrees. A report by Fitch Ratings this month predicts that Canadian house prices will fall by 3% to 5% next year due to borrowers’ default mortgages, and prices will not recover until 2022.

Fitch said that it expects house prices to rise by 7% by the end of 2020, but 2021 will bring about a rise in unemployment, a fall in housing affordability, a fall in rents, a reduction in immigration, and a mortgage stress test.

Fitch’s report shows that government support and holiday periods have created an unsustainable situation, especially since the decline in rental prices has made homeownership less attractive.

Royal LePage’s analysis also looked at payment deferrals but came to a clearer conclusion: “Because of many Canadians who postpone payments, the broker stated that concerns about the impact of potential mortgage defaults related to summer mortgage deferrals have been significant. Alleviate.” Repayments have already begun. “

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