– Average house price expected to increase by 9.2 % this year –
TORONTO, July 5, 2006 – Canada’s housing market continued to make advances from coast to coast in the second quarter. The pace of growth varied greatly by region, with activity levels and price increases in the Western provinces far outpacing that in the rest of the country. Compared to the same period last year, Ontario, Quebec and Atlantic Canada maintained similar high sales volumes, with moderate price increases, while extraordinary demand and limited inventory drove double digit price increases in the west, according to a report released today by Royal LePage Real Estate Services.
Of the housing types surveyed, the highest average price appreciation occurred in detached bungalows, which rose to $292,237 (+15.6%) year-over-year, followed by standard condominiums, which rose to $208,403 (+14.2%), and standard two-storey properties, which increased to $351,367 (+13.3%).
Echoing the growth and activity of Canada’s market to date, the national average house price is forecast to rise by 9.2 per cent year-over-year to $272,200 by the end of 2006, while transactions are projected to rise marginally to 485,000 unit sales, up by 0.4 per cent from 483,250 unit sales last year.
The continued strength of Canada’s economy, coupled with strong consumer confidence and rising but moderate interest rates continued to drive robust demand for housing across the country. The supply of homes for sale met requirements in most regions, with the exception of the Western provinces, and especially Alberta, where sellers’ market conditions prevailed.
“Interest and activity in the residential real estate market continued unabated in the second quarter, with record or near record sales volumes experienced throughout the country. The process of buying or selling a home across most of Canada has become easier, as supply has been able to keep up with demand and price increases have been modest,” said Phil Soper, president and chief executive, Royal LePage Real Estate Services. “The story in the west, and particularly in Alberta, is quite different, with extraordinary demand levels far surpassing available inventory. The result has been some of the highest year-over-year price increases that have been experienced in any region of this country in decades. This pattern will likely continue for the remainder of the year.”
While prices appreciated in all major cities, the provinces displayed substantial regional variances. Insufficient supply characterized the markets in Calgary, Edmonton and Vancouver, while the central and eastern provinces saw more modest growth despite robust demand. As the typically active spring market begins to simmer, a slight increase in inventory is expected across all markets, satiating buyers’ demand.
Alberta’s thriving economy has positioned Calgary and Edmonton as the national leaders in price appreciation in all surveyed housing types. Demand in Alberta has been fuelled by the confidence buyers have in the economy, as they are able to spend more on a home than ever before due to significant income increases and the equity they have developed in their homes.
In Ottawa and Toronto, growth in the housing markets remained stable, as increased inventory levels helped to moderate the rate of price appreciation. In Atlantic Canada, inventory increases resulted in a slower rate of price appreciation when compared with 2005.
In some markets, particularly in Western Canada, high house prices and lack of product priced some buyers out of the market, leading them to explore less established areas, or reconsider their housing type. The rising mortgage rates are regarded as having little to no effect on buyers entering the market.
Added Soper: “Canadians are currently more optimistic about their financial future than are their American counterparts, and for good reason. Current economic forecasts for the balance of this year and into next remain positive. We are unlikely to see the kind of housing market corrections that have begun to occur in isolated regions south of the border in our country. The midterm outlook for the Canadian housing market remains very positive.”
Courtesy: Royal LePage