Toronto is in for an massive year of price growth that will see the Greater Toronto Area surpass Greater Vancouver’s home prices by the end of 2024, according to a new report.

The Royal LePage national update forecast a 10 per cent increase in aggregate home prices for the GTA by the fourth quarter of 2024 — an increase from their original forecast of 6 per cent in December of 2023. This surge would take Toronto’s aggregate price past Vancouver’s, which has long been the country’s most expensive housing market both for buying and renting.

According to the report, the GTA aggregate home price has already increased 5.2 per cent year-over-year to $1,177,700 in the first quarter of 2024, and 4.8 per cent on a quarterly basis. 

The “stronger-than-expected first quarter” is credited in part to anticipation of increased competition once the Bank of Canada begins to cut rates, as predicted by many experts, including CIBC deputy economist Benjamin Tal. 

“Major banks began modestly reducing lending rates late last year, offering a bit of breathing room for buyers looking to transact at a lower interest rate before prices increased too much,” Royal LePage chief operating officer Karen Yolevski noted.

While many buyers have decided to enter the market even with elevated interest rates, there are certainly many who are waiting for the first rate cut to jump back in. The Bank of Canada announced they would be holding the policy rate at 5 per cent for the sixth review period since July, but experts expect a rate cut during the next announcement in June.

“Once the central bank does make a move, and that first highly-anticipated cut to rates is made, even if it is only by 25 basis points, I expect we will see the price appreciation curve steepen upwards when the highly rate-focused crowd jumps into the market,” Royal LePage president and CEO Phil Soper said. 

However, even with interest rate cuts, the report notes that it is something else that will be primarily driving up housing prices — supply issues. “It is the severe shortage of housing in markets small and large in virtually every part of the country that remains the main culprit,” Soper noted. 

Royal LePage predicted a “normally busy spring market that will lead into an uncomfortably busy fall,” noting that we’ll be transitioning out of a buyers’ market and into a sellers’ market. Currently in the GTA, the sales-to-new-listings ratio is 50 per cent, indicating a balanced market. 

It’s not just Toronto that will be seeing a steep increase in prices. Royal LePage has also revised their national forecast, now predicting a 9 per cent increase in the aggregate home price in Canada in the fourth quarter of 2024 instead of the December 2023 forecast of 5.5 per cent. And the aggregate home price in Montreal is forecast to increase by 8.5 per cent, joining Toronto in outpacing Calgary in price gains, which was previously forecast to see the highest year-over-year appreciation in the country.

Quebec City and Calgary will both see an 8 per cent increase in the aggregate home price according to the forecast, while Vancouver is expected to see a more modest 5.5 per cent gain.