Canadian home prices expected to increase by 1.7 per cent in 2019

• Rising interest rates will be a key factor affecting housing affordability in 2019
• Thirty-six per cent of Canadians are considering a home purchase in the next five years, down from 48 per cent at the same time last year
• Sixty-five per cent of Canadians said they do not want to live near a retail cannabis store

TORONTO and KELOWNA, BC, Dec. 11, 2018 /CNW/ - Modest price increases are expected in 2019, as the RE/MAX 2019 Housing Market Outlook estimates the average sales price to increase by 1.7 per cent. Housing markets across the country have stabilized in 2018, after the unprecedented increases in average sales price that many markets experienced in 2017. However, there continue to be some outliers in 2018 average sales price gains, particularly in areas outside of the main city centres, such as Chilliwack (+13 per cent), Windsor (+13 per cent), London (+17 per cent) and Charlottetown (+11 per cent).

It is anticipated that the market will continue to stabilize, as Canadians will start to feel the pinch of higher interest rates as they move forward with their home-buying plans in 2019. A recent survey revealed almost one-third (31 per cent) of Canadians said higher interest rates have not affected their ability to get an affordable mortgage thus far. However, this is expected to change in 2019. A separate survey of RE/MAX brokers and agents found 83 per cent predict rising interest rates will make it more difficult for Canadians to purchase a home next year.

British Columbia
Reduced foreign buyer activity has opened up more opportunity for local buyers in Greater Vancouver's condo market. While average residential sale prices for all properties increased by two per cent, from $1,030,829 in 2017 to $1,049,362 in 2018, the number of sales dropped by 30 per cent. The low absorption rate is expected to bring down average residential sale prices in 2019 by three per cent.

Similarly, the number of sales year-over-year has dropped by 33 per cent in Kelowna. Rising interest rates, government policy changes and the mortgage stress test were all factors that contributed to the decline, which is expected to continue into 2019. Average residential sale prices increased by six per cent year-over-year from $674,930 in 2017 to $718,915 in 2018, with prices expected to decrease by three per cent in 2019.

"The drop in sales in key markets across British Columbia can be partially attributed to Canadians' increasing difficulty in getting an affordable mortgage in the region," says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. "The situation created by the introduction of the mortgage stress test this year, as well as continually increasing interest rates, means more Canadians will be priced out of the market."

Prairies
Slowing economic conditions in Alberta have contributed to a decrease in average residential sale prices in Edmonton, from $393,003 in 2017 to $379,539 in 2018. While economic recovery is expected to take some time, the luxury market is thriving, with prospective investors in cannabis and migrant speculators driving this new segment. Meanwhile in Calgary, the market is expected to stay relatively flat in 2019 due to its reliance on the oil and gas industry, and further real estate hindrances like the mortgage stress test.

Conversely, Winnipeg has shown a moderate increase of average residential sale price, rising from $315,720 in 2017 to $323,001 in 2018. Looking ahead to 2019, prices are expected to continue on this upward trajectory, with an expected increase of four per cent. Although the senior population is downsizing, immigration to Winnipeg from urban centres such as Toronto and Vancouver (15,000 people move to Manitoba every year) is expected to drive sales going into 2019. In Saskatchewan, both Regina and Saskatoon have experienced a buyers' market which is set to prevail into 2019.

Ontario
In Toronto, rising interest rates and the mortgage stress test were the two major factors affecting market activity this past year, with average sale prices dropping by four per cent from $822,572 in 2017 to $789,181 in 2018, and unit sales down by 16 per cent. Lack of affordability in the single-detached segment will make it difficult for buyers wanting to enter the freehold market. The resale condo market, on the other hand, now represents almost 37 per cent of total residential sales, with its relative affordability fueling the rise of vertical growth. Average residential sale price is expected to increase by two per cent in 2019.  

Communities such as Ottawa and London are sellers' markets, showing increased growth in average residential sale price. This trend is expected to continue into 2019, however rising interest rates and the stress test continue to make it difficult for prospective buyers in other Ontario communities, including Barrie, Oakville and Durham regions.

"Due to the stress test and increasing interest rates, we are seeing more buyers in traditionally affordable regions in Ontario unable to enter the market," says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX of Ontario-Atlantic Canada. "This is particularly true for first-time buyers and single Millennials, as evident in cities like Brampton, Kingston and Durham."

Atlantic Canada
In Atlantic Canada, Halifax, Saint John and St. John's have all experienced stable price appreciation in 2018. Detached homes continue to be the most in-demand property type, while the region's aging population and retirees are driving the condominium market. The economic slowdown and drop in oil prices in St. John's have resulted in a buyer's market, but activity is expected to pick back up in the latter half of 2019.

The RE/MAX 2019 average residential sale price expectation for Canada is an increase of 1.7 per cent.

For the full 2019 RE/MAX Housing Market Outlook report, click here.

DATA TABLE

Market	Average Residential Sale Price*		YOY %	Estimated 2019***
	2017**	2018*	2018/2017	2019
Victoria	$548,500	$597,450	+9%	0%
Vancouver	$1,030,829	$1,049,362	+2%	-3%
Kelowna	$674,930	$718,915	+6%	-3%
Chilliwack	$456,736	$515,654	+13%	-3%
Edmonton	$393,003	$379,539	-3%	-5%
Calgary	$484,059	$487,399	+1%	0%
Saskatoon	$345,327	$333,187	-4%	+3%
Regina	$330,700	$322,500	-2%	0%
Winnipeg	$315,720	$323,001	+2%	+4%
Windsor	$264,750	$299,750	+13%	+10%
London	$325,000	$379,654	+17%	+5%
Sudbury	$298,594	$273,175	-9%	+2%
Kitchener-Waterloo	$461,230	$473,275	+3%	+3%
Hamilton-Burlington	$723,737	$707,949	-2%	+2%
Niagara	$405,897	$420,966	+4%	+3%
Barrie	$494,458	$477,839	-3%	+3%
Cornwall	$215,500	$201,500	-6%	-3%
Thunder Bay	$246,403	$248,851	+1%	0%
North Bay	$248,000	$252,000	+2%	+3%
Oakville	$1,245,636	$1,078,595	-13%	+5%
Mississauga	$721,890	$705,406	-2%	+4%
Brampton	$577,018	$577,846	+0.1%	+4%
Durham	$627,879	$594,585	-5%	+3%
Toronto	$822,572	$789,181	-4%	+2%
Kingston	$338,410	$378,150	+12%	+3%
Ottawa	$649,434	$678,670	+5%	+4%
Saint John	$177,447	$186,250	+5%	+4%
Halifax	$293,199	$299,982	+2%	+3%
Charlottetown	$230,000	$255,000	+11%	0%
St. John's	$269,493	$265,523	-1%	0%

*Average residential sale prices listed are from January 1 to October 31 in 2018

** Average residential sale prices listed are for the full year in 2017

*** Estimated percentage increase/decrease for 2019 in comparison to previous year

 

Key Findings from the 2019 RE/MAX Housing Market Outlook Omnibus Survey

Thirty-six per cent of Canadians are considering buying a property in the next five years. This is down from 48 per cent at the same time last year. The decrease is attributed to actual and perceived impacts of the mortgage stress test and rising interest rates on housing affordability. Thirty-one per cent of survey respondents said higher interest rates have not affected their ability to get an affordable mortgage so far, but the risk of future rate hikes, as indicated by RE/MAX brokers and agents, might affect these buyers in 2019.

Liveability continues to be important to Canadians, with more than half wanting to live closer to green spaces, work and better access to public amenities. Despite the apparent popularity of recreational cannabis since legalization in October 2018, 65 per cent of respondents said they do not want to live near a retail cannabis store. Specific figures:

• 52 per cent of Canadians would like to live closer to green spaces
• 47 per cent would like better access to public amenities
• 35 per cent would like to live closer to work
• 37 per cent would like to live closer to public transit
• 35 per cent would like to move to a different neighbourhood
• 59 per cent strongly disagree with living near a retail cannabis store

ABOUT THE 2019 RE/MAX HOUSING MARKET OUTLOOK REPORT
The 2019 RE/MAX Housing Market Outlook Report includes data from local boards and RE/MAX brokerages.  RE/MAX brokers and agents are surveyed on trends, local development and features. 

ABOUT LEGER
Leger is the largest Canadian-owned full-service market research firm. An online survey of 1,547 Canadians was completed between October 26-29, 2018, using Leger's online panel. LegerWeb. Leger's online panel has more than 400,000 members nationally and has a retention rate of 90%. A probability sample of the same size would yield a margin of error of +/- 2.5%, 19 times out of 20.

ABOUT THE RE/MAX NETWORK

RE/MAX was founded in 1973 by Dave and Gail Liniger, with an innovative, entrepreneurial culture affording its agents and franchisees the flexibility to operate their businesses with great independence. Over 120,000 agents provide RE/MAX a global reach of more than 100 countries and territories. RE/MAX is Canada's leading real estate organization with more than 20,000 Sales Associates and over 900 independently-owned and operated offices nationwide. RE/MAX, LLC, one of the world's leading franchisors of real estate brokerage services, is a subsidiary of RE/MAX Holdings, Inc. (NYSE: RMAX). With a passion for the communities in which its agents live and work, RE/MAX is proud to have raised millions of dollars for Children's Miracle Network Hospitals® and other charities. For more information about RE/MAX, to search home listings or find an agent in your community, please visit www.remax.ca.

FORWARD LOOKING STATEMENTS
This report includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as "believe," "intend," "expect," "estimate," "plan," "outlook," "project" and other similar words and expressions that predict or indicate future events or trends that are not statements of historical matters. These forward-looking statements include statements regarding housing market conditions and the Company's results of operations, performance and growth. Forward-looking statements should not be read as guarantees of future performance or results. Forward-looking statements are based on information available at the time those statements are made and/or management's good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Such risks and uncertainties include, without limitation, (1) changes in business and economic activity in general, (2) changes in the real estate market, including changes due to interest rates and availability of financing, (3) the Company's ability to attract and retain quality franchisees, (4) the Company's franchisees' ability to recruit and retain real estate agents and mortgage loan originators, (5) changes in laws and regulations that may affect the Company's business or the real estate market, (6) failure to maintain, protect and enhance the RE/MAX and Motto Mortgage brands, (7) fluctuations in foreign currency exchange rates, as well as those risks and uncertainties described in the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") and similar disclosures in subsequent SEC filings. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Except as required by law, the Company does not intend, and undertakes no duty, to update this information to reflect future events or circumstances.

SOURCE RE/MAX INTEGRA

and to coordinate interviews, please contact: Danielle Scott, O: 416-934-2127, E: [email protected]; Melissa Clemance, O: 647-951-1452, E: [email protected]; McCall Capozzi, O: 250-860-3628, E: [email protected]