Housing prices could increase 5% this fall in Ontario: report

Housing prices could increase up to five per cent in some Ontario cities this fall.

A low housing supply in many Ontario cities has kept home prices high, particularly in the GTA, despite Bank of Canada interest rate cuts, real estate brokerage Re/Max said in its 2024 Fall Housing Market Outlook report.

However, some buyers are gaining more confidence as mortgage rates decrease and are slowly re-entering the market heading into fall, keeping prices relatively stable in comparison to the year prior, the report states. Housing supply could become a larger issue once further interest rate cuts motivate buyers and spark more competition.

“The fall market is usually a good early indicator for activity as we look ahead to early 2025, and we’re headed toward more healthy territory. With interest rates starting to ease, buyers are beginning to come off the sidelines,” says Christopher Alexander, president, Re/Max Canada.

“That’s not to say the fall market will be in full swing according to historic standards. Consumers will drive that trend, so we’ll need to see a bigger move by the Bank of Canada for that to happen.”

This fall, home prices will increase up to five per cent in some GTA cities including Brampton and Mississauga, the report says.

The average price for a home could increase to $1,124,490 in Mississauga, and $1,063,712 in Brampton by the end of the year.

York Region homes are expected to increase three per cent, and Niagara Region homes will increase by two per cent.

Durham Region homes are expected to go up one per cent to an average of $943,340 by the end of the year.

These increases are reflective of trends across Canada where all housing types are expected to increase between one and six per cent in the majority of regions by year’s end, the report states.

But there are a few outliers in Ontario.

Toronto, Kitchener-Waterloo, Hamilton, and Burlington are expecting a price decrease, the report states. The average price of a home in Hamilton could go down to $785,308 by the end of the year, and down to $1,097,912 in Burlington.

The next Bank of Canada interest rate announcement is scheduled on Sept. 4 and experts believe there could be another rate cut.

The possibility of a rate cut has boosted confidence among first-time homebuyers, with one-quarter of Canadians (25 per cent) actively saving for a home purchase and confident they will be able to buy soon (with the majority being younger Millennials and Gen Zs aged 18-24, at 35 per cent), according to a Leger survey commissioned by Re/Max as part of the report.

On the flip side, dropping interest rates now may prove too little, too late for some current homeowners, with 14 per cent saying they need to renew their mortgage soon, and with the current higher interest rate, they may need to sell their home.

A few Canadians, two in 10 Canadians (16 per cent) said they will feel more comfortable engaging in the real estate market once they see there is more than a 100-basis-point cut to the lending rate between now and the end of the year.

When it comes to financial savings, the Leger survey revealed that while a home purchase is listed among the top three priorities for 25 per cent of Canadians, it has taken a back seat to day-to-day expenses such as utilities and food (58 per cent), and travel (45 per cent).

In the search for affordability, one-quarter of Canadians say that they are considering moving to another country (28 per cent) and 25 per cent say they are reconsidering whether to have children or start a family due to housing affordability challenges.

“Despite some consumer confidence starting to return to the market this season, the reality is Canadians are still grappling with some serious housing affordability challenges rooted in lack of supply. Yes, borrowing is becoming less expensive, but this won’t make housing affordable in the long run,” says Alexander. “Markets ebb and flow, and as buyers re-enter the market and absorb inventory, we’ll see more upward pressure on price.”

The Leger online survey of 1,530 Canadians aged 18 years or older, was completed between Aug. 9 and 11, 2024, using Leger’s online panel. Leger’s online panel has approximately 400,000 members nationally and has a retention rate of 90 per cent. A probability sample of the same size would yield a margin of error of +/-2.5 per cent, 19 times out of 20.

See the full report here.