Home prices could rise 15% in 2022 despite efforts to cool market: Royal LePage

Home prices in Canada will rise at a faster rate that first predicted, Royal LePage said Tuesday, as a strong spring market set the bar high for price growth in 2022.

An especially strong spring market has pushed Royal LePage to raise its full-year outlook for Canadian home prices, though experts say there should at least be some “moderation” in real estate activity heading into 2023.

The Canadian Real Estate Association (CREA) said Tuesday that while March saw fewer overall sales across the national housing market than last year’s all-time record for the same month, average prices were up 11.2 per cent year-over-year to $796,068.

But in Royal LePage’s latest housing survey also released Tuesday, the brokerage said the aggregate price of a home in Canada was $856,900 in the first quarter of 2022, an increase of 25.1 per cent annually.

Projecting that the “strong seller’s market” would persist into the spring, Royal LePage also raised its full-year forecast for home prices in 2022.

It now expects the aggregate price of a home to rise 15 per cent, ending up just shy of $900,000, compared with the previous estimates in January of a 10.5 per cent annualized increase.

“When we set our forecast for 2022, we’d expected a more moderate first quarter,” Royal LePage CEO Phil Soper said in an interview with Global News.

Soper pointed to high demand from buyers overlapping with a continual low level of housing stock, keeping prices at “uncomfortably high levels” through the first three months of the year.

The start of the year, and the lead-up to the busy spring market, plays an important role in setting the price trajectory for the rest of the year, he said.