Toronto, ON, December 19, 2019 – Ontario’s existing home sales have rebounded significantly but a sluggishness in housing supply is leading to bidding wars which are pushing prices up across all housing types. New home construction, which dropped by almost 12 per cent in 2019, is expected to increase by 6.8 per cent in 2020 and by 6.2 per cent in 2021, led largely by new rental builds, according to Central 1’s Ontario Regional Economist Edgard Navarrete, in the latest Ontario Housing Forecast for 2019-2022.
Declining mortgage rates and the highest rate of population growth in Ontario since the early 2000s are resulting in an increased number of buyers; driving sales and price growth.
The report forecasts that demand for home ownership and rentals in Ontario will remain steady, despite ongoing trade uncertainty and an estimated GDP growth of between 1.8 – 2 per cent from 2020 to 2022.
Sellers’ markets are expected to prevail. Median home prices are forecast to climb by 7.1 per cent in 2019 (to $465,381) and by 7.4 per cent in 2020 (to $499,819), before the pace of growth slows down by 5.2 per cent in 2021 (to $537,805) and by 4.4 per cent in 2022 (to $582,981). Navarrete said: “As the economy improves and returns to full capacity, central bank policy rates and borrowing costs will gradually rise, which will keep sales and median price growth range bound by the tail end of the forecast horizon.”
The rental vacancy rate will hit a low of 1.5 per cent over the forecast horizon, keeping rents well above trend. New supply of rental housing will increase but, given the three-year average completion time for high-density housing, it won’t be until after 2022 when the increased rental supply will alleviate some of the pressures from the primary rental market.
Large urban housing markets in Toronto, Ottawa and Kitchener-Barrie-Waterloo will grow sales at a faster clip than markets in the Hamilton-Niagara Peninsula, London, Windsor-Sarnia, and northern Ontario which have been adversely affected by a slowing goods-producing sector, resulting in many local potential buyers remaining on the sidelines. “A larger share of sales activity in these regions will come from Ontarians moving away from relatively expensive markets such as the Greater Toronto Area looking for a good deal,” said Navarrete.
Meanwhile, the housing market in Kitchener-Cambridge-Waterloo and Peterborough has been relatively insulated from negative demand shocks due to the large population of retirees and young tech professionals moving there.
- Ontario’s existing homes market in recovery phase Declining mortgage rates and strong population growth will underpin sales and price growth
- Housing starts will decline in 2019, a delayed reaction to previous market activity, but will rebound strongly post 2019
- With strong inflows of new residents looking for housing, the rental market will remain very tight and market rental prices should remain elevated
Read the Ontario Housing Forecast 2019-2022
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Meadhbh Monahan (pronounced ‘Maeve’) Communications Specialist
C 236 885 3363
Regional Economist, Ontario