Poll indicates tomorrow's federal budget announcement, Obama inauguration
anticipated to buoy optimismTORONTO, Jan. 26 /CNW/ - During the fourth quarter of 2008, Canada's real
estate market posted a decline in both unit sales and house prices, according
to a House Price Survey released today by Royal LePage Real Estate Services.
The combination of a global economy in recession and shrinking employment
figures did much to dampen consumer confidence, diminish home sales and cause
house prices to drop.
Of the housing types surveyed, the average price of detached bungalows
dipped by 4.8 per cent to $319,640, followed by standard condominiums, which
decreased by 5.2 per cent to $233,230, year-over-year. The average price of
standard two-storey properties fell by 6.3 per cent to $376,140,
year-over-year.
While national average house prices decreased, price trends varied
dramatically across regional real estate markets. Bolstered by strong local
economies, the housing markets in Regina and St. John's posted double-digit
year-over-year price appreciations, while the larger cities that have seen the
greatest increase in prices this decade, including Toronto, Edmonton, Calgary
and Vancouver, recorded declining house prices.
The tumultuous times that characterized the end of 2008 are not
anticipated to define 2009. A recent poll commissioned by Royal LePage found
that almost half (49%) of Canadians surveyed agree that the economic stimulus
measures anticipated as part of tomorrow's Canadian federal budget
announcement will have a positive impact on Canada's real estate market.
Political actions taking place south of the border are also likely to buoy the
country's economic conditions, as the poll found that 82 per cent of Canadians
agree that the inauguration of Barack Obama will have a positive impact on
consumer confidence in Canada.
"The steady flow of universally dire news that Canadian consumers faced
in the fourth quarter has gradually given way to a mixed diet of positive and
negative economic indicators," said Phil Soper, president and chief executive,
Royal LePage Real Estate Services. "This is clearly having some impact on
consumer confidence as nearly half of all Canadians believe the steps the
government is taking to stimulate the economy in tomorrow's budget will
positively impact the country's real estate market."
Added Soper: "During the fourth quarter, housing markets go through a
typical seasonal slowdown, and 2008 was no different. Earlier in 2008, as the
country began to experience the anticipated adjustment in home sales, news
that Canada would be hit hard by the rapidly expanding global recession caused
home sales to grind to a halt in the last quarter. In many regions of the
country, those that did decide to sell their homes were faced with a limited
number of buyers who could be broadly classified as bargain hunters. What
would have been a normal cyclical correction gave way to a sharp reset in
housing values."
The inability for real estate activity to continue at the pace seen
earlier in the decade comes as no surprise. While the large price increases,
bidding wars and brief listing periods that characterized the 'boom' years
were driven by solid economic fundamentals including real buyer demand and the
ability and willingness to match rising listing prices, they were
unsustainable in the long run, particularly if any of the factors that
underpinned the economy weakened - exactly what occurred at the end of 2008.
Soper notes that as consumer confidence levels begin to creep upwards,
the country's solid economic fundamentals should lead to a recovery in the
housing market. "For many people, deciding to hold off on buying a home at the
end of the year was an easy decision to make. With consumer confidence in
tatters, many were reticent about making any large purchases. However, waiting
on the sidelines during the normally slow winter market is one thing, sitting
out the seasonally busy spring market is quite a different story. Activity
levels should rise as the year progresses." said Soper.
Despite the global and Canadian economic downturn that characterized much
of the fourth quarter of 2008, each province soldiered on in their way, and
relied on the strength of their local economies to support their housing
markets.
While lags in sales and prices were noted in many parts of the country,
St. John's real estate market experienced phenomenal double-digit price
increases and recorded Canada's highest price appreciation in the fourth
quarter. Move-up buyers created an abundance of activity in the housing
landscape as stable employment and growing incomes encouraged investment in
more expensive properties. Despite disappointing employment news from the
forestry sector, the recent announcement that Vale Inco NL is planning to
construct a large new hydromet plant, helped to sustain the high level of
confidence Newfoundlanders have in their province's economy.
Mirroring St. John's healthy economic activity and fuelled by stable and
diverse economies, many cities in Atlantic Canada saw healthy price
appreciations at the year's end.
Looking west, Saskatchewan's local economy also weathered the storm, and
led to price increases in both Regina and Saskatoon. Finally adjusting to the
sharp rise in prices experienced over the past two years, residents of
Saskatoon saw much smaller average price increases year-over-year in the
fourth quarter. Regina, where recent price increases have been more modest,
experienced double-digit house price gains. In both cities, favourable
employment rates and consumer confidence levels, and growing population
figures, were able to sustain upward trends within the province's real estate
market during the last three months of 2008. Also insulated to a certain
degree by its strong regional economy, Winnipeg's real estate market saw price
gains during the fourth quarter. However, like Saskatoon, the large percentage
increases that have characterized the Winnipeg market in recent years have
given way to modest single digit price appreciations.
The cities in which real estate prices appreciated most quickly over the
last few years, including Toronto, Calgary, Edmonton and Vancouver trended
lower as shown by year-over-year house price comparisons. Despite these
cities' tight labour markets and reasonable buyer demand, the fact that house
price growth overshot the rate of income growth during the boom periods, will
result in a short-term price correction.
With relatively modest average housing values and a recent history of
moderate price appreciation, residents in Montreal and Ottawa experienced only
slight price corrections. While no region of the country is immune to the
effects of the global recessions, the relative strength of these regions'
diversified economies are expected to buffer the housing markets there when
compared to the corrections happening in other large Canadian cities.
Looking ahead, Soper concluded, "The first quarter of 2008 was the final
period of substantial price appreciation during the long expansionary cycle
that Canadian housing enjoyed this decade. The first quarter of this year will
pale in year-over-year comparison, although conditions should improve over the
dismal final months of 2008. The balance of 2009 should see gradual and
continuous improvements as the effects of low mortgage rates along with
efforts by governments and central banks to get the economy back on its feet
again begin to take hold."FOURTH QUARTER 2008 ROYAL LEPAGE AVERAGE HOUSE PRICE CHART
-------------------------------------------------------------------------
Detached Bungalows Standard Two Storey
-------------------------------------------------------------------------
Q4 2008 Q4 2007 Bungalow Q4 2008 Q4 2007 2 Storey
Market Average Average % Change Average Average % Change
-------------------------------------------------------------------------
Halifax 215,000 201,333 6.8% 259,667 231,667 12.1%
-------------------------------------------------------------------------
Charlottetown 157,000 152,000 3.3% 188,000 180,000 4.4%
-------------------------------------------------------------------------
Moncton 150,000 151,000 -0.7% 126,000 135,000 -6.7%
-------------------------------------------------------------------------
Fredericton 162,000 155,000 4.5% 210,000 197,000 6.6%
-------------------------------------------------------------------------
Saint John 225,064 196,500 14.5% 294,695 255,000 15.6%
-------------------------------------------------------------------------
St. John's 190,050 157,667 20.5% 261,800 219,333 19.4%
-------------------------------------------------------------------------
Atlantic 190,921 173,150 10.3% 238,310 212,000 12.4%
-------------------------------------------------------------------------
Montreal 261,372 258,150 1.2% 334,850 342,491 -2.2%
-------------------------------------------------------------------------
Ottawa 321,333 308,583 4.1% 317,083 306,500 3.5%
-------------------------------------------------------------------------
Toronto 411,483 448,133 -8.2% 513,417 550,705 -6.8%
-------------------------------------------------------------------------
Winnipeg 219,650 214,494 2.4% 247,029 237,571 4.0%
-------------------------------------------------------------------------
Regina 274,167 229,200 19.6% 238,260 199,000 19.7%
-------------------------------------------------------------------------
Saskatoon 300,000 292,500 2.6% 328,750 321,250 2.3%
-------------------------------------------------------------------------
Calgary 410,333 429,889 -4.5% 408,263 461,811 -11.6%
-------------------------------------------------------------------------
Edmonton 301,429 336,786 -10.5% 337,075 370,000 -8.9%
-------------------------------------------------------------------------
Vancouver 743,750 795,250 -6.5% 837,500 895,000 -6.4%
-------------------------------------------------------------------------
Victoria 425,000 425,000 0.0% 433,000 456,000 -5.0%
-------------------------------------------------------------------------
National Average
House Price $319,640 $335,850 -4.8% $376,140 $401,300 -6.3%
-------------------------------------------------------------------------
---------------------------------------------
Standard Condominium
---------------------------------------------
Q4 2008 Q4 2007 Condo
Market Average Average % Change
---------------------------------------------
Halifax 159,500 148,500 7.4%
---------------------------------------------
Charlottetown N/A N/A N/A
---------------------------------------------
Moncton N/A N/A N/A
---------------------------------------------
Fredericton 133,000 126,000 5.6%
---------------------------------------------
Saint John N/A N/A N/A
---------------------------------------------
St. John's 203,000 165,000 23.0%
---------------------------------------------
Atlantic 174,183 145,429 19.8%
---------------------------------------------
Montreal 200,284 202,859 -1.3%
---------------------------------------------
Ottawa 207,167 196,833 5.2%
---------------------------------------------
Toronto 299,675 306,830 -2.3%
---------------------------------------------
Winnipeg 132,083 127,408 3.7%
---------------------------------------------
Regina 172,917 144,000 20.1%
---------------------------------------------
Saskatoon 194,250 205,000 -5.2%
---------------------------------------------
Calgary 257,189 284,144 -9.5%
---------------------------------------------
Edmonton 206,854 240,500 -14.0%
---------------------------------------------
Vancouver 405,000 428,250 -5.4%
---------------------------------------------
Victoria 265,000 292,000 -9.2%
---------------------------------------------
National Average
House Price $233,230 $246,050 -5.2%
---------------------------------------------
Additional Poll Results
- 73 per cent of Canadians polled agree that the economic stimulus
measures that many people anticipate will be included in the federal
budget announcement will have a positive impact on consumer
confidence in Canada.About The House Price Survey
The Royal LePage Survey of Canadian House Prices 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. This release
references an abbreviated version of the survey, which highlights house price
trends for the three most common types of housing in Canada in 80 communities
across the country. A complete database of past and present surveys is
available on the Royal LePage Web site at www.royallepage.ca, and current
figures will be updated following the end of the fourth quarter. A printable
version of the fourth quarter 2008 survey will be available online on February
16, 2009.
Housing values in the Royal LePage Survey are Royal LePage opinions of
fair market value in each location, based on local data and market knowledge
provided by Royal LePage residential real estate experts. Historical data is
available for some areas back to the early 1970s.
About Royal LePage
Royal LePage is Canada's leading provider of franchise services to
residential real estate brokerages, with a network of over 14,000 agents and
sales representatives in 600 locations across Canada. Royal LePage is managed
by Brookfield Real Estate Services, and is part of a brand family that
includes Royal LePage, Johnston and Daniel, Realty World and La Capitale. An
affiliated company, Brookfield Real Estate Services Fund, is a TSX listed
income trust, trading under the symbol "BRE.UN."
For more information visit www.royallepage.ca or www.brookfieldres.com.
Polling Methodology
From January 21, 2009 to January 22, 2009, Angus Reid Strategies
conducted an online survey among a randomly selected, representative sample of
1,001 adult Canadians through the Angus Reid Forum. The margin of error for
the total sample is +/- 3.1%, 19 times out of 20. The results have been
statistically weighted according to Statistics Canada's most current
education, age, gender and region Census data to ensure a representative
sample of the entire adult population of Canada. Discrepancies in or between
totals are due to rounding.
For further information: For the regional market highlights or to
contact a spokesperson, please contact: Tiffany Fisher, Whetstone
Communications Inc., Phone: (416) 595-9776 x 222, E-mail:
tiffany@whetstonepr.com
