Home prices in the Greater Toronto Area will continue to rise in 2022, even with multiple interest rate hikes: analysis

Real estate brokerage Royal LePage says expected interest rate hikes in 2022 “may not be enough to offset the significant upward pressure on prices” for homes, particularly in the Greater Toronto Area where it expects the cost of the average home to double. -digits once again.

The brokerage said the overall price of a home in the Greater Toronto Area rose 17.3% in 2021 to $1,119,800 as demand continued to outstrip supply.

He predicts that in 2022, prices in the GTA will rise another 11%, with total home prices reaching $1,243,000 in the fourth quarter.

The projected price growth comes despite market expectations that the Bank of Canada could raise interest rates up to five times in 2022, which would significantly increase the cost of borrowing.

“It’s not sustainable. The good news, if you can call it that, is that we’re all seeing prices rise at about half the rate they did in 2021 in the coming months as house prices continue to be higher expensive, the rate at which they are getting more expensive is falling,” Royal LePage Chairman and CEO Phil Soper told CP24 Friday morning. “We’ll see things get back to normal appreciation levels in the future, I guess by 2023 we’ll be back to single-digit increases, which is what we expect in the city and across the country at over the decades.”

The Bank of Canada’s overnight rate has been at its effective lower bound of 0.25 since the start of the COVID-19 pandemic, but with inflation surging and jobs numbers returning At their pre-pandemic standards, the central bank is expected to begin a cycle of rate hikes in the coming months.

Soper said when that happens, it will effectively make homes more expensive and “some people will be priced out of the market.”

But he said that is unlikely to be enough to rein in rising house prices, given the lack of supply.

“We unfortunately built up this lack of supply for years and it really came to a head during the pandemic when there was such a focus on our homes,” he said. “People were saving money. They weren’t traveling, they weren’t eating out, and they redirected that money, in large part, to their living conditions.

Royal LePage reports that in 2021, the median price of a single-detached home in the Greater Toronto Area increased by 22.4% to $1,421,200, while the median price of a condominium increased by 14, 8% to reach $665,400.

Soper, however, said condo price growth could outpace that of single-detached homes in 2022 due to the “growing gap” in prices, at least in the GTA.


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