Following more than a year of record price appreciation across the country, Canadian home values are expected to rise strongly again in 2022, however at a slower pace compared to 2021. Pent-up demand from buyers who were unable to transact in 2021, coupled with the growing need for shelter from new household formation and newcomers to Canada, will continue to put upward price pressure on a market suffering from a chronic supply shortage. According to the Royal LePage Market Survey Forecast, the aggregate price of a home in Calgary is set to rise 6 per cent year-over-year to $610,600 in 2022, with the median price of a single-family detached property and condominium projected to increase 6 per cent and 2 per cent to $689,000 and $229,500, respectively.
“The lack of housing supply in Canada is a very real issue; one that cannot be solved overnight. While some believe that housing is now overvalued, signals point to a level of demand that will continue to outpace inventory, keeping prices rising on a steep upward trajectory,” said Phil Soper, president and CEO, Royal LePage. “That said, I do expect to see price appreciation ease from the unhealthy levels that we have been grappling with over the last 18 months.”
Pent-up demand not addressed in 2021 is expected to continue through the normally quiet winter season and spill over into the spring market of 2022. In addition, the federal government’s plan to increase immigration levels will bring a surge of new demand, particularly in large urban centres.
Soper noted that Canada’s strong economy, healthy full-time employment trends, and paradoxically, the emergence of a new coronavirus variant, should all contribute to the strength of the country’s real estate market.
“While the emergence of another COVID-19 variant is disheartening, we can’t ignore its probable impact on our nation’s real estate market,” said Soper. “It is hard to imagine that the Bank of Canada will begin the inevitable campaign to dampen inflation through higher rates with much still to be learned about Omicron and cases on the rise again. Employers may back-off plans to mandate a return to the office, sustaining the hyper-focus on the importance of the home as a place to both live and work. And, normal travel and entertainment will again be curtailed, continuing the household cash stockpiling trend that has defined the pandemic era.
“All of these economic variables have been shown to stimulate housing activity,” Soper continued. “Many of those looking to purchase a home, whether their first, an upgrade, or a recreational property, stand able to take advantage of increased savings and record-low interest rates.”
Those who have been unable to transact are expected to return to the market in the new year, ahead of an expected increase to interest rates.
“While Omicron appears certain to delay the inevitable, monetary policy will eventually tighten in the face of uncomfortably high inflation,” said Soper. “When policy makers signal that a rate hike is on the way, we expect a pull-ahead effect, with buyers rushing to market before borrowing costs increase materially. Those who have pre-qualified with lower mortgage rates will also be under time constraints to transact.”
From a public safety standpoint, real estate brokerages and their professionals in the field are by now well versed in the safety protocols necessary to ensure the buying and selling process is safe for their clients.
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