The London Real Estate Market
March 28, 2022
The London and area real estate market continues to skyrocket with an average home price of approximately $825k as of February 2022.
According to the London and St. Thomas Association of Realtors (LSTAR), the average benchmark price shows a 41.2% increase within the last twelve months. This dramatic surge in price is due to numerous factors.
The local market is being greatly affected by the number of homebuyers coming into the region from the Greater Toronto Area and from across Ontario. London is still an affordable option in comparison to the homes available in the GTA. So, the demand for homes in London is continuously increasing as more out-of-town buyers choose to move to London.
Furthermore, there has been a significant increase in the number of Londoners looking to buy their first homes. The work-from-home shift that was experienced during the pandemic has motivated many Londoners to look for more spacious living quarters. This additional demand on the already stressed supply is limiting the direction of the prices in the London real estate market: the only feasible direction is up.
Similarly, the price of newly built homes is on an upward trend. Why? Inflation is driving the cost of materials and the cost of labour to unprecedented highs. As builders work to provide a supply of affordable homes to the stressed market, inflation is once again limiting the direction of prices.
The cost of materials to build a new home is now greater than ever, too. For example, the price of lumber has been increasing since last Spring. And as of the start of this year, all interior finishes have been increasing in price without prior notice. Suppliers are increasing prices as much as twenty to thirty percent overnight. Whereas in the past, the prices of interior finishes were adjusted at a maximum of two to five percent with ample notice.
In addition to the cost of materials, the cost of labour is at an all-time high. The cost increase associated with labourers comes from the shortage of workers available. This not only drives the prices of building a home up, but it also increases the timeframe needed to build a home. When the cost of materials is constantly increasing, this becomes an issue.
The upside? The current state of the real estate market is a great benefit to the local economy. The London region will experience a bout of economic recovery due to the influx of new Londoners and the increase in real estate sales.