Royal LePage predicts 12% rise in Canadian house prices this year

In its latest quarterly outlook, Royal LePage is forecasting that aggregate prices for homes in Canada will increase by just over 12 per cent this year.

Brexit fears could boost demand for Canadian real estate as alternative

Royal LePage says it doesn't see a correction coming this year in the country's hottest housing markets of Vancouver and Toronto. (Mike Cassese/Reuters)

Royal LePage is forecasting that aggregate prices for homes in Canada will increase by just over 12 per cent this year.

In its second-quarter house price survey and forecast, the firm said the extended period of low interest rates will delay a cooling in the country's hottest real estate markets that was predicted for the second half of this year.

"Economic and social disruptions have rocked the world once again, introducing new risks and making it very likely that the Bank of Canada will leave interest rates as-is for now," said Royal LePage president and CEO Phil Soper.

He said the firm doesn't see even a mild correction for either the Toronto or Vancouver markets this year.

Based on data from 53 markets across the country, Royal LePage said the price of a home rose by 9.2 per cent year-over-year in the second quarter to $520,223.  The firm said its aggregate home price is based on a weighted average of the median values of homes for reported property types, such as two-storey homes, bungalows and condos.

Nationally, the price of a two-storey house rose 10.7 per cent to $619,671, while bungalow prices grew by 7.9 per cent to $437,121. Condominium prices grew by just over four per cent to $348,189.

Brexit fallout 

In the wake of the U.K.'s vote to leave the European Union, Soper said there have been suggestions that foreign money will push into the "relative safety" of Canada. 

"We anticipate the impact, if any, will be seen in the commercial property sector and not in housing market," he said. "Beyond Europe, our research does point to increasing Vancouver and Toronto region foreign buyer activity in residential markets this quarter."

On a regional basis, Royal LePage said the Greater Vancouver area saw an aggregate year-over-year home price increase of 24.6 per cent to a median price of $1,098,599.

  "Alongside skyrocketing prices of single-family homes, we have seen an uptick in the rate of price appreciation for condominiums over 1,000 square feet, when compared to smaller units in this market," Soper said. "This may indicate that families being priced out of the single-family detached home market in Vancouver are looking upwards to

He said the situation isn't quite the same in the Greater Toronto Area, where aggregate prices were up 10.2 per cent year-over-year in the second quarter. In the Toronto area, buyers are still moving out to suburban areas to find affordable housing options.