Toronto-Area Housing Prices Will Rise 11% by Year’s End, Real Estate Firm Predicts

A real estate sign is displayed in front of a house in the Riverdale area of Toronto on Sept. 29, 2021. (The Canadian Press/Evan Buhler)

With housing prices in Canada’s major cities already holding at steady highs, one of Canada’s largest real estate firms is predicting that aggregate home prices in the Greater Toronto Area (GTA) will climb by another 11 percent in the final quarter of 2023.

Royal LePage said in a housing-price forecast published on July 13 that it’s expecting average Canadian home prices to remain steady throughout the rest of most of 2023, although the firm also said it’s anticipating a “drop in activity” on the housing market because of the Bank of Canada’s recent decision to hike its overnight lending rate to 5 percent.

“As affordability and low supply continue to challenge buyers, the region’s rental market is also getting tighter,” Royal LePage wrote. “In the Greater Toronto Area, the average rental price of a one-bedroom apartment increased more than 15 per cent year-over-year in the first quarter of 2023.”

The real estate firm added that its forecasting of the aggregate price of a GTA home—a combination of the median prices of all housing types in the region—will increase by 11 percent in the fourth quarter of 2023 compared to the same quarter last year.

The aggregate price of a home in the GTA already increased by about 1 percent year-over-year to more than $1.18 million in this year’s second quarter, said Royal LePage.

“On a quarterly basis, the aggregate price of a home in the GTA increased 5.4 per cent,” the firm said.

Housing Availability

Royal LePage says the aggregate price of a home in Canada during this year’s second quarter is sitting 5.6 percent below the peak Canada reached in the first quarter of 2022.

The real estate firm has also now adjusted its national year-end forecast to estimate that housing prices in the fourth quarter will rise 8.5 percent over 2022’s final quarter.

“Chronic shortage of housing supply, due in part to sellers’ hesitancy to list, continues to put upward pressure on home prices,” said Royal LePage, adding that it “urges officials to quickly increase support for more development, including affordable, purpose-built rental buildings.”

Royal LePage’s forecast comes shortly after the Toronto Regional Real Estate Board said in early July that Toronto home sales in June were hindered by uncertainty due to the Bank of Canada’s expected rate hikes, but average home sale prices still increased during the same month.

“A persistent lack of inventory likely sidelined some willing buyers because they couldn’t find a home meeting their needs,” the board’s president Paul Baron said in a press release earlier this month.

“Simply put, you can’t buy what is not available.”

The Canadian Press contributed to this report.