As a whole, Canada’s residential real estate market saw year-over-year growth in the third quarter as fears of a double dip recession or a housing bubble faded, while house price appreciation slowed to a more modest five per cent in the quarter, which is historically typical of balanced real estate markets.
“Most Canadian housing markets cooled in the third quarter. In fact, the year is unfolding much as we predicted, with the unusually active first half of 2010 giving way to slower markets in the later part of the year. Helped by very low rates in a competitive mortgage financing market, the third quarter was slightly stronger than anticipated, on new demand fuelled by improved affordability in many regions,” said Phil Soper, president and chief executive, Royal LePage Real Estate Services. Looking ahead, it is very unlikely that the period from now to year-end can keep pace with the activity levels posted in the overheated market of the final quarter of 2009.”
In the third quarter, the average price of a detached bungalow in Canada was $424,531, up 4.6 percent compared to a year ago when the price stood at $402,056. Over the same period, standard two-storey homes rose 4.4 percent to $360,329 while standard condominiums rose 3.9 percent to $226,481.
Housing markets in Alberta stabilized in the third quarter as inventory rose and year-over-year prices flattened. The average price of a detached bungalow in Calgary rose 2.7 per cent to $412,744, while standard condominiums and two-storey homes decreased by 1 per cent to $246,656 and 1.1 per cent to $410,489, respectively.
“House price growth now sits just below the long term annual average of approximately five per cent, but once this is adjusted for inflation, which is very low and expected to continue to be that way for some time, appreciation is right on track. Canadian homeowners will be pleased,” said Soper.
St. John’s, Winnipeg, Montreal and Vancouver posted house price increases above the national average. Average house prices in St. John’s saw year-over-year increases from 12.3 per cent to 14 per cent depending on housing type. Similarly, Winnipeg saw increases between 8 per cent and 11.7 per cent on average year-over-year. Real estate growth in both cities was fueled by an influx in population. St. John’s has been an attractive market because of its booming oil industry and Manitoba recently experienced its highest inflow of international immigrants in nearly 40 years according to Statistics Canada.
“During the period which stretched from 2007 through early 2010, the Canadian housing market was characterized by often wild swings in housing activity. We believe much of that volatility has been worked out of the system and that gradual economic improvement, particularly with our employment picture, offset by the dampening effect of a gradual increase in mortgage costs, should bring a steadier housing industry through 2011,” said Soper.
“While the quantity of home sales transactions fluctuated significantly period to period over the past two years, as the real estate industry absorbed the impact and uncertainty of the recession, Canadian house prices saw much less change. In sharp contrast to the U.S. situation, in which a mountain of foreclosures flooded the supply side of the market during the most volatile times, Canadians were reluctant to list their homes. With a limited supply of listings, house prices maintained their value and Canadians, their equity,” added Soper.
In the rest of the country, the strongest growth in year-over-year increases came in St. John’s, Newfoundland, where detached bungalows were up 14 per cent over 2009, to $228,025, standard two-storey houses rose 13.7 per cent to $313,775 and standard condominiums increased 12.3 per cent to $241,850.
Big gains were also seen in Vancouver, as interest rates continue to draw buyers , resulting in year-over-year price increases of between 8.0 and 10.2 per cent. Standard two-storey Vancouver homes rose to an average price of $977,250. Inventory levels in Victoria are at their highest since 1998, stabilizing the real estate market and offering buyers considerable choice. Bungalows in Victoria rose 5.4 per cent year-over-year to $490,000 while standard condominiums showed no growth compared to this time last year.
Winnipeg’s year-over-year average prices also saw large increases, up between 8.0 and 11.7 per cent, largely driven new immigration to the city. The average price of a standard condominium showed the largest increase rising to $163,857.
Royal LePage’s quarterly House Price Survey shows the annual change of prices for key housing segments in select national markets.
The Royal LePage House Price Survey is the largest, most comprehensive study of its kind in Canada, with information on seven types of housing in over 250 neighbourhoods from coast to coast. A complete database of past and present surveys is available on the Royal LePage Web site at www.royallepage.ca.