Spring Housing Market Poised For Continued Price Growth Following Double-Digit Gains In Fourth Quarter

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According to the Royal LePage House Price Survey released today, the aggregate price of a home in Canada increased 17.1 per cent year-over-year to $779,000 in the fourth quarter of 2021. Canada’s real estate market has sustained another year of record prices, as strong buyer demand continues to outpace supply in almost every market from coast to coast.

“Like a bad dream that disrupts your sleep for months on end, we ushered in 2022 with a fresh round of pandemic restrictions designed to combat a new wave of infections. Asked to stay away from the workplace and unable to travel even locally for entertainment, thousands of Canadians have been redirecting their growing savings into improving living conditions, as the family home doubles as office, restaurant and schoolroom,” said Phil Soper, president and CEO of Royal LePage. “It has been a busy winter in the housing industry and a very busy spring looms ahead.”

The Royal LePage National House Price Composite is compiled from proprietary property data, nationally and in 62 of the nation’s largest real estate markets. When broken out by housing type, the national median price of a single-family detached home rose 21.1 per cent year-over-year to $811,900, while the median price of a condominium increased 15.8 per cent year-over-year to $553,800. Price data, which includes both resale and new build, is provided by Royal LePage’s sister company RPS Real Property Solutions, a leading Canadian real estate valuation company.


Eighty-seven per cent of the report’s markets posted double-digit year-over-year aggregate price increases, while 61 per cent of the markets saw a quarterly price increase of 3.0 per cent or greater, which is historically not typical of the Canadian real estate market in a fourth quarter.

“The shortage of homes available for sale or rent is one of the major social and economic challenges of our times,” noted Soper. “Policy makers at all levels of government may take comfort from 2022’s very modest improvement in the supply of available properties relative to demand, yet we see home prices rising at double-digit levels again this year.”

Canada’s chronic housing shortage pre-existed the pandemic and with growing household formation and more newcomers to Canada adding to demand, affordability threatens to erode again.

“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.”

Interest rates

Canada’s inflation rate reached an 18-year high2 at the end of 2021, driven by increased costs to consumer goods, including gasoline and food, and significant delays in the supply chain. The Bank of Canada is expected to begin increasing its overnight lending rate incrementally later this year, which would result in higher mortgage rates.

“Many industry watchers expect the inevitable rise in borrowing costs will abruptly end the current seller’s market with its characteristic rising home values,” Soper said. “We are experiencing the first expansionary housing cycle, which began in the second quarter of 2020, since the introduction of the federal mortgage stress test. Buyers have had to qualify for a loan at a rate much higher than what they will actually pay, creating a significant buffer before they reach their capacity to manage larger payments.”

While rising interest rates slow house price appreciation, higher borrowing costs will be coming off historical lows and the increases may not be enough to offset the significant upward price pressure from Canada’s housing supply crisis.

Federal policy

Royal LePage supports policies that are supportive of transparency in the real estate process and that prioritize consumers’ best interests. One of the proposed changes by the Federal government is an end to blind-bidding in real estate transactions. While this would enhance transparency, it is not expected to improve affordability. Additionally, a one per cent tax on foreign-owned vacant properties, which came into effect on January 1st, is not expected to materially increase housing supply. The nationwide inventory shortage remains the culprit tied to eroding affordability.

“Policies that attempt to artificially quell demand in the face of growing household formation are distractions from Canada’s housing shortage crisis,” concluded Soper.


As noted in previous releases, immigration remains one of the largest drivers of buyer demand. According to the Royal LePage Newcomer Survey, the average duration before newcomers purchases a home is three years after arrival and, nationally, 64 per cent rent their first home, spurring significant rental demand in large urban centres.3

In December, Royal LePage issued its 2022 forecast stating that the national aggregate price of a home is expected to increase 10.5 per cent year-over-year.

Royal LePage House Price Survey Chart: rlp.ca/house-prices-Q4-2021
Royal LePage Forecast Chart: rlp.ca/market-forecast-Q4-2021

SOURCE Royal LePage Real Estate Services


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