Record home prices continue to rise

Real estate prices continued to soar closing out 2021 according to the London/St. Thomas Association of Realtors.

In December, 530 homes were sold in the area with an average price of $707,000, an increase of 27 per cent from the same period the year before.

However the lack of supply continues to lag with only three months of inventory

“Less than two weeks of inventory available right now. Now some of that was December. For the properties on the market. We are seeing an uptick in properties coming on the market now.” Says Jack Lane, President of LSTAR.

Lane adds and the number to watch in gauging the real estate market locally and federally is the benchmark pricing, which has grown by over $500,000 in the last 10 years for a single family home.

“It's not only more accurate for London, St. Thomas and surrounding area but for all jurisdictions across Canada. And those are the numbers that the Canadian Real Estate Association are publishing and looking at right now when they compare large centres across the country.”

A report published by Vancouver-based non-profit Generation Squeeze is calling for a surtax on homes worth more than $1 million as a way to rein in skyrocketing prices and fund housing projects.

Tax specialist and lecturer at Western University Robert Pilling, says there will be very little appetite for this.

“And the problem is that most of the effect that's happening is happening below that line.”

Pilling believes a deferred surtax similar to what is done in the U.S. would be more effective, “Where you sell your home as long as you buy another home. You don't have to pay tax on it. But if when you're out of the game, then you pay tax on all those gains.”

As for fears of interest rates rising, Lane believes that any increases will be marginal and incremental over the next several years. But does expect prices to continue to rise at least over the next 12 months.

“We are stabilizing to some degree. But I still expect that we're going to see a 10 to 15 per cent increase between now and this time next year.”