The average price of a home in Canada keeps breaking records and the Canadian Real Estate Association (CREA) expects the hot market to continue into 2023.
CREA reported on Tuesday that the national average price of a home set a record of more than $816,000 last month, up 20.6 per cent from the same month last year. The average price was noticeably boosted by sales in the Greater Vancouver and Toronto areas.
In Ontario, the average price average price rose almost 26 per cent year-over-year to $1,086,493.
The average price of a home in Chatham-Kent topped $531,000 for the first time ever in February of 2022.
CREA said price growth continues to set records while home sales have kicked off 2022 below 2021 levels.
"This is consistent with strong demand meeting end-of-month inventory levels that are lower than they have ever been,” said CREA in its quarterly forecast report. "Along with the ongoing supply crisis, the other main factor expected to impact housing markets this year and next will be higher interest rates."
The Bank of Canada announced its first quarter point interest rate hike in early March and CREA projects more interest rate hikes by the end of next year up to 2.75 per cent after a survey of analysts.
CREA also noted that roughly 612,800 properties are forecast to trade hands across Canada this year, a decline of 8.1 per cent from last year, but still the second-highest annual figure ever "by a sizeable margin." In Ontario, 242,000 homes are forecast to change hands, which is 10.4 per cent less than in 2021.
"Home sales are forecast to remain historically strong in 2023 while continuing to move slowly back in the direction of the longer-term trend. Limited supply, higher prices and higher interest rates are expected to further tap the brakes on activity and price growth in 2023 compared to 2022, particularly in Canada’s most expensive markets," CREA said.
National home sales are forecast to slide back a further 2.7 per cent to 596,150 units in 2023, according to CREA, but they added that would still the third-best year on record.
"Combined with higher interest rates and higher prices, we could be at a turning point where price growth begins to slow down and inventories finally begin to recover after seven years of declines," said Shaun Cathcart, CREA’s Senior Economist. "Still, in order to turn this market back towards balance long-term, building more new homes across the spectrum remains the key."
CREA spokesperson Pierre Leduc said no one foresaw the average price of a home in Ontario increase from $391,000 a decade ago to just over $1 million last month.
