What are housing prices going to do in the long-term?
Trying to predict the long-term outlook for housing prices is very difficult. There are several factors that influence the cost of homes. While the real estate market is cyclical, history has shown that over the long-term, housing prices appreciate.
That said, the continued desirability of the GTA as a place to live, combined with the lack of housing available to buy, will sustain a strong demand for new homes for decades to come. With 115,000 new residents coming to the area every year, prices will depend on the ability of the housing supply to meet the increasing demand.
It is important to note that 2018 saw a cooling in the cost of single-family homes in the GTA due to new mortgage rules (aka the stress test) but prices remained fairly stable due to supply constraints. Condominiums, on the other hand, increased in price due to strong demand.
Another factor that influences costs for new homes is the rising cost of materials and labour. Increases in development charges either muted price decreases for single-family homes or helped contribute to price escalations of condominiums.
As a result, the current provincial government is working on a Housing Supply Action Plan[JB1] to find ways to speed up the development of new homes and increase supply to meet demand. Municipalities are also looking at ways to expedite the development approval process. For example, the City of Toronto is conducting an end-to-end review of their planning and approval process to identify ways to speed up the approval of new housing.