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Home prices across Canada are expected to climb next year with expected Bank of Canada rate cuts poised to reinvigorate the housing market, according to a new report.

Royal LePage’s 2024 market survey 2024, released Thursday, predicts that home prices will make incremental gains in the first half of the year. Those gains will be followed by larger price increases in the second half of the year, spurred by expected interest rate cuts from the Bank of Canada after a historic rate-hiking cycle.

“We see 2024 as an important tipping point for the national economy as the majority of Canadians acknowledge that the ultra-low interest rate era is dead and gone,” Royal LePage CEO Phil Soper said in a press release on the research.

“We believe that the ‘great adjustment’ to tolerable, mid-single-digit borrowing costs will have a firm grip on our collective consciousness after only modest rate cuts by the Bank of Canada.”  

WHERE ARE HOME PRICES HEADED?

Royal LePage is forecasting aggregate home prices in Canada will rise by 3.3 per cent in the first quarter of 2024 on an annual basis, followed by 0.2 per cent year-over-year increase in the second quarter.

In the third quarter, Royal LePage anticipates home prices will rise 3.3 per cent compared to the previous year, followed by a 5.5 per cent year-over-year bump in the fourth quarter, landing at a median home price of $843,684 -- back to the highs reached during the COVID-19 pandemic. 

“Based on this forecast, by the end of next year, home prices will have essentially climbed back to their pandemic peak, reached in the first quarter of 2022,” the report said. 

Single-family home prices are anticipated to rise six per cent in the fourth quarter of 2024 on an annual basis to $879,164, the report said, while condominium prices are expected to rise five per cent to $616,140 during that same period. 

CALGARY SET FOR BIGGEST PRICE GAINS

Calgary home prices have risen in the second half of 2023 while prices declined in other markets, and Royal LePage expects this trend to continue next year.

The report predicts that Calgary aggregate home prices will outpace all major markets in 2024 and grow eight per cent to $711,612.

“Although activity has slowed in Calgary, home prices have not dipped like they have in other cities across Canada, due to a sustained shortage of supply,” Corinne Lyall, a broker and owner at Royal LePage Benchmark, said in the press release. 

Source: BNN Bloomberg