Demand for homes remains high across the country as Canadians continue to prioritize their living space over other purchases. However, housing shortages characterized many urban centres before the pandemic and supply has continued to tighten. Multiple buyers competing for too few properties has resulted in continued upward pressure on prices and buyers who were unsuccessful are strengthening the pipeline of demand. With no supply relief on the horizon, home prices are expected to rise through the spring market of 2022.
“Everywhere, in our largest urban centres, and in the nation’s small and medium-sized towns and cities, new homes are not being built fast enough to satisfy growing demand,” said Soper. “In addition to the slow and expensive regulatory processes that burden builders, construction has been hampered by pandemic-specific challenges, including labour shortages and the increased cost of construction materials as suppliers struggle with supply chain issues. Some developers have been hesitant to commit to new projects.”
The country has been fighting a chronic housing supply shortage since long before the pandemic forced us to repurpose our homes for work, school, dining and entertainment, not to mention an alternative to travel. With more young people than ever before looking for their first home and tens of thousands of newcomers to Canada adding to demand, it has never been more important for policy makers to take steps to address the country’s housing supply shortage crisis.
Those hoping that an increase in interest rates will slow demand or bring prices down may be out of luck. Higher borrowing costs will be coming off historical lows, and the increases may not be enough to offset the significant upward price pressure from inventory shortages.
Nationally, the aggregate price of a home increased 17.1% year-over-year to $779,000 in the fourth quarter of 2021. When broken out by housing type, the national median price of a single-family detached home rose 21.1% year-over-year to $811,900, while the median price of a condominium increased 15.8% year-over-year to $553,800.
Read Royal LePage’s fourth quarter release for national and regional insights.
Fourth quarter press release highlights:
- High demand outstripping low inventory at start of 2022 signals further home price gains going into spring market
- 87% of the report’s 62 regions saw double-digit year-over-year aggregate price growth in Q4
- 61% of the report’s 62 markets saw a quarterly aggregate price increase of 3% or greater
- Kingston, Ontario, posts highest year-over-year aggregate and detached home price gains in Canada (38.1% and 44.3%, respectively)