Home prices in Canada jumped 3.8 per cent in the fourth quarter of 2024, a new Royal LePage report shows, as activity in the sluggish housing market started to pick up towards the end of the year.
According to Royal LePage’s latest house price survey released on Tuesday, the aggregative price of a home – calculated using a weighted average of the median value of all housing types – rose 3.8 per cent year-over-year in the fourth quarter to $819,600. That’s above Royal LePage’s previous estimates for Q4. On a quarterly basis, the increase was a more modest 0.5 per cent.
Royal LePage also found that the median price of a single-family detached home increased 4.9 per cent annually to $855,900. The median price of a condo – a segment of the market that has struggled amid a glut of inventory and weak demand – increased 1.5 per cent annually to $592,700.
Royal LePage president and CEO Phil Soper said in a statement that there are several factors “revitalizing Canada’s real estate market and making home ownership more attainable”, namely the Bank of Canada’s interest rate reductions and changes to mortgage rules that could reduce monthly payments for some buyers.
The Bank of Canada cut its benchmark interest rate by 175 basis points since June, including two jumbo 50 basis point cuts in October and December. The central bank’s policy rate now sits at 3.25 per cent, with economists expecting the loosening cycle to continue through 2025, albeit at a more gradual pace.
Mortgage policy changes introduced by the federal government also went into effect last month, including increasing the cap on insured mortgages to $1.5 million from $1 million, reducing the minimum down payment required to purchase a home in the $1 million to $1.5 million range. Homebuyers are also now able to take out 30-year mortgages on new builds if they are first-time buyers. A TD report found that the new rules will likely drive average home prices higher this year.
While the Canadian real estate market has been in a slump, activity started to pick up towards the end of 2024 – and not just in the luxury segment, which saw a 40.5 per cent year-over-year increase in the fourth quarter.
“Year-over-year activity levels were up sharply in Canada’s largest cities during the fourth quarter, with national home sales volumes exceeding the 10-year moving average for the first time since the post-pandemic market slowdown began three years ago,” Soper said.
“As sidelined buyers regained confidence and took advantage of improved affordability, momentum built steadily through the final months of 2024.”