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London housing market to favour sellers in 2021, prices expected to rise 10% in 2021
The London housing market is expected to continue in seller’s market territory in 2021, characterized by a widespread shortage of inventory that will continue to push prices up across the region. Low inventory has been a common trend across many Ontario housing markets, putting upward pressure on prices. Indeed, the London housing market saw prices rise to $479,488 in 2020 (Jan. 1-Oct. 31) compared to $408,417 in 2019 (Jan. 1-Dec. 31). The RE/MAX outlook for London real estate is an increase of 10% in average price to $489,077 across all property types.
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Who’s driving the London housing market?
Since the start of COVID-19, homebuyer preferences have shifted in favour of more space, larger yards and closer proximity to parks. This has been a common trend across many Canadian housing markets as well as regions abroad, as homebuyers seek more space and less density outside of urban areas in the wake of COVID-19. Factors impacting this broader trend include the rise in remote work, as well as lower housing prices outside of urban areas.
This trend is especially common among first-time homebuyers, who are expected to be the main market driver in 2021. Most of these buyers are looking for condominiums, townhomes or semi-detached homes, based on their affordability and availability.
Move up buyers in the region, who tend to be families, have remained relatively unaffected by the pandemic and are not hesitating to purchase a new home when the opportunity arises.
London’s luxury housing market also remains largely unaffected by the pandemic, but the demand for luxury properties is expected to increase in 2021.
London’s most popular neighbourhoods include North West London, South West London and East London, based on the number of sales.
Looking ahead, employment, interest rates, and migration from GTA homebuyers are expected to have a large impact on the London housing market in 2021.
Canadian housing market in 2021
Canadians are on the move. RE/MAX isn’t calling this an “exodus,” but the re-location trend across the Canadian housing market is real, and it’s just one focus of the RE/MAX 2021 Housing Market Outlook Report. RE/MAX Canada anticipates healthy housing price growth at the national level, with move-up and move-over buyers continuing to drive activity in many regions across the Canadian housing market. An ongoing and widespread housing supply shortage is likely to continue, presenting challenges for homebuyers and putting upward pressure on prices.
Due to these factors, the 2021 RE/MAX 2021 outlook for average residential prices is an estimate of +4% to +6% nation-wide. Here’s the regional break-down:
Additional report findings include:
- 35% of RE/MAX brokers indicate that “move-over” buyers from other cities and provinces will continue to spark market activity in 2021
- 45% of RE/MAX brokers indicate that move-up buyers will likely be a primary driver of the housing market demand in 2021
- Half of Canadians (53%) are confident that Canada’s housing markets will remain steady in 2021
- 52% of Canadians believe real estate will remain one of the best investment options in 2021
“We’ve seen a lot of anecdotal evidence since the summer that households are considering significant lifestyle changes by relocating to less-dense cities and neighbourhoods,” says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX of Ontario-Atlantic Canada. “This has sparked unprecedented sales this year in suburban and rural parts of Canada and we expect this trend to continue in 2021.”
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In April, the London housing market experienced a steep decline in the number of real estate transactions as a direct result of the COVID-19 lockdowns. However according to the RE/MAX Fall Market Outlook Report, sales activity began to resume in May, and June sales surpassed levels reached in June 2019 and June 2018. London is currently a seller’s market, especially for starter homes. A shortage of listings is still impacting the London housing market, with a July inventory of only 1.1 months.
London affordability relative to the GTA, and continued low interest rates, are prompting many first-time homebuyers and investors to take advantage of current conditions. This momentum is expected to continue into the fall market.
The London housing market is expected to see a 5% increase in average residential prices for the remainder of the year.
Ontario Real Estate Trends
What’s been happening across other Ontario real estate markets? With the province being one of the hardest-hit regions in Canada, markets such as Niagara, Mississauga and Kitchener-Waterloo experienced significant drops in activity. However, come June, they bounced back aggressively as economies began to reopen. With all of Ontario now in phase three of re-opening and consumers more comfortable engaging in the market, market activity in Ontario is expected to remain steady in the fall, with modest price increases of up to 6% in some regions.
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Canadian Housing Market Trends
Leading indicators from RE/MAX brokers and agents across Canada’s housing market point to a strong market for the remainder of 2020. According to the RE/MAX Fall Market Outlook Report, RE/MAX brokers suggest that the average residential sale price in Canada could increase by 4.6% during the remainder of the year. This is compared to the 3.7% increase that was predicted in late 2019.
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The pandemic has prompted many Canadians to reassess their living situations. According to a survey conducted by Leger on behalf of RE/MAX Canada, 32% of Canadians no longer want to live in large urban centres, and instead would opt for rural or suburban communities. This trend is stronger among Canadians under the age of 55 than those in the 55+ age group.
Not only are Canadians more motivated to leave cities, but changes in work and life dynamics have also shifted their needs and wants for their homes. According to the survey, 44% of Canadians would like a home with more space for personal amenities, such as a pool, balcony or a large yard.
Canadians equally split on their confidence in the housing market
Canadians are almost equally split in their confidence in Canada’s real estate market, with 39% as confident as they were prior to the pandemic, and 37% slightly less confident. When it comes to the prospect of a second wave of COVID-19, 56% of Canadians who are feeling confident in Canada’s real estate market are still likely to buy or sell.
“The classically hot spring market that was pushed to the summer months due to the COVID-19 pandemic created a surprisingly strong market across Canada and across all market segments,” says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX of Ontario-Atlantic Canada. “Looking ahead, government financial aid programs may be coming to an end in September, which could potentially impact future activity; however, the pent-up demand and low inventory dynamic may keep prices steady and bolster activity for the remainder of 2020. Overall, we are very confident in the long-term durability of the market.”
Additional highlights from the 2020 RE/MAX Fall Market Outlook Report Survey:
- 48% of Canadians would like to live closer to green spaces
- 48% of Canadians say it’s more important than ever to live in a community close to hospitals and clinics
- 33% of Canadians would like more square footage in their home and have realized they need more space
- 44% of Canadians want a home with more outdoor space and personal amenities (i.e. balcony, pool etc.)
About the 2020 RE/MAX Fall Market Outlook Report
The 2020 RE/MAX Fall Market Outlook Report includes data and insights supplied by RE/MAX brokerages. RE/MAX brokers and agents are surveyed on market activity and local developments.
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Seller’s market expected in 2020, prices to rise 5%
The RE/MAX London housing market outlook for 2020 continues to favour sellers – conditions which characterized 2019 market activity as well. The average residential sale price expectation for London in 2020 is an increase of five per cent, based on historical trends of steady year-over-year sales growth.
London continues to see immense growth via migration from the GTA over the past five years, with no end in sight. This should continue into 2020 and beyond, impacting housing supply and demand in the region. There are currently 1.9 months of inventory, which will trend slightly upward next year. London’s rental demand has increased year-over-year and will continue its upward trajectory in 2020, with a very low vacancy rate as a result of higher home prices.
Move-up buyers, first-time homebuyers and foreign buyers will be the main market drivers in the year ahead.
North and south west London will be the hottest neighbourhoods in 2020 due to their proximity to hospitals, university, stores, restaurants and the 401. London’s east will be a hot neighbourhood for affordability.
From a national perspective, RE/MAX anticipates a leveling out of the highs and lows that characterized the Canadian housing market in 2019, particularly in Vancouver and Toronto, as we move into 2020. Healthy price increases are expected, with an estimated 3.7-per-cent increase in the average national residential sales price, according to the RE/MAX 2020 Housing Market Outlook Report.
Most individual markets surveyed across Canada experienced moderate price increases year-over-year from 2018 to 2019. However, some regions in Ontario continue to experience higher-than-normal gains, including London (+10.7 per cent), Windsor (+11 per cent), Ottawa (+11.7 per cent) and Niagara (+12.9 per cent).
“Southern Ontario is witnessing some incredibly strong price appreciation, with many regions seeing double-digit gains,” says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX of Ontario-Atlantic Canada. “Thanks to the region’s resilient economy, staggering population growth and relentless development, the 2020 market looks very optimistic.”
