Canada's real estate market expected to continue strong gains into the first
half of 2010

- Demand and supply finding balance in the second half of the year -

TORONTO, Jan. 7 /CNW/ - Canada's residential real estate market is forecast to remain unusually strong through the first half of 2010 as economic conditions across the country improve and the stimulus impact of low interest rates continues to stoke demand, according to today's Royal LePage Market Survey Forecast and House Price Survey. As confidence in the recovery builds in early 2010, increases in average house price levels and overall market activity are expected to continue. The gradual erosion of affordability driven by higher house prices and the expected late-year modest upward movement of interest rates, together with an improvement in listings supply as confidence improves, are expected to bring the market back into balance in the second half of the year, when home price increases are expected to moderate.

"The Canadian real estate market enters 2010 with considerable momentum from an unusually strong finish to the previous year," said Phil Soper, president and chief executive, Royal LePage Real Estate Services. "The stimulus effect of low borrowing costs has contributed to a sharp rise in demand that has driven activity levels to new highs. This demand, coupled with a typical seasonal undersupply of homes for sale, should cause home prices to continue to appreciate significantly during the early months of the year. Improving supply as the year unfolds and easing demand as the cost of home ownership rises should moderate home price increases in the second half of 2010."

In contrast to the difficult months during the worst of the recession, house prices appreciated during the later part of 2009, with fourth quarter price averages surpassing averages from the fourth quarter 2008. The average price of detached bungalows rose to $315,055 (up 6%), the price of standard two-storey homes rose to $353,026 (up 5.2%), and the price of a standard condominium rose to $205,756 (up 6.4%). The first two quarters of 2009 saw significant year-over-year price declines across the housing types surveyed and the third quarter provided the first signs and saw a strong rebound in Canadian home values.

Regions that saw the strongest declines during the recession are now showing marked gains. Those regions include Toronto and the Lower Mainland, B.C. Vancouver in particular experienced a robust quarter, with home prices rising across all housing types surveyed.

"No other sector of the economy has been as highly affected by economic stimulus as housing," commented Soper. "As consumer confidence has improved, Canadians have shown a lingering reluctance to acquire depreciating assets such as consumer durables, but have embraced the opportunity to invest in real property. Predictably, the regions benefiting most from this renewed interest in home ownership are those with lower average house prices and strong economic confidence, such as Winnipeg and parts of Atlantic Canada."

Soper added, "Our forecast is built upon an expectation that interest rates will ease upward before the year's end, which should have a dampening effect on demand, allowing it to come into balance with the supply of resale homes on the market. Further, we expect to see an increasing number of homes listed for sale as the year progresses - as Canadians regain confidence in the economy, they should be more willing to enter into a large financial transaction such as the sale of a home."

REGIONAL MARKET SUMMARIES

Halifax saw varied gains across all surveyed housing types in comparison to fourth quarter 2008. Notably, more affordable homes posted the highest price increases due to the influx of workers returning from Western Canada.

Montreal saw strong gains this quarter as year-over-year price levels rose across all three housing types surveyed. Recent increases in demand have resulted in lower than normal inventory levels. Inventory levels are expected in increase in 2010. Continued demand is expected to result in moderate price levels.

House price levels in Ottawa are moderately higher this quarter compared to fourth quarter 2008 across all housing types surveyed. Fourth quarter sales activity did not slow as expected, and the demand has resulted in higher incidences of sellers receiving multiple offers, an unusual occurrence in end of year activity for this region. While inventory levels are low and there is competition among home buyers, this may abate as the government eases economic stimulus in 2010.

The Toronto market saw year-over-year price increases across the housing types surveyed in the fourth quarter. Of particular interest is the increase in sales of higher priced units, which were hit hard by the recession over the previous 12 months. There was a surge of first-time buyers active in the market last year, depleting the inventory of entry-level units. They are expected to be joined by move-up, executive, and luxury buyers in the coming year, resulting in additional price appreciation.

Winnipeg saw some of Canada's largest home price increases this quarter. More than one third of homes sold in the region went for above their asking price driven largely by first time buyer activity. This strong growth is expected to continue well into 2010.

Inventory levels in Regina are low, as much as thirty per cent lower than expected for this time of year; this situation should be corrected in the spring of 2010. House prices should continue to increase into 2010, driven by labour force growth in the construction industry.

Price levels in Calgary remain constant as the market is correcting from the record growth seen in the middle of the previous decade. Inventory levels are one quarter the levels seen in 2008, and the reduction in choice has delayed purchases. Activity and price levels are expected to increase modestly in 2010.

House price levels in Edmonton are also still correcting from the 2005 to 2007 boom. Low inventory levels have provided some price support, and activity is expected to increase in the spring of 2010.

Vancouver saw significant gains in price levels, with average increases of approximately ten per cent across the housing types surveyed. Inventory levels are beginning to decrease, and there has been an increase in sales involving multiple offers. Sales activity may drop off due to the city's focus on the Olympics in the first quarter, but the market is expected to be robust for the remainder of the year.

Royal LePage's quarterly House Price Survey shows the following annual change of prices for key housing segments in select national markets:

    
    -------------------------------------------------------------------------
                                        Detached Bungalows
    -------------------------------------------------------------------------
                           Q4 2009    Last Quarter     Q4 2008      Bungalow
    Market                 Average         Avg         Average      % Change
    -------------------------------------------------------------------------
    Halifax                238,000       241,000       215,000         10.7%
    -------------------------------------------------------------------------
    Charlottetown          160,000       160,000       157,000          1.9%
    -------------------------------------------------------------------------
    Moncton                152,300       165,240       150,000          1.5%
    -------------------------------------------------------------------------
    Fredericton            182,000       180,000       162,000         12.3%
    -------------------------------------------------------------------------
    Saint John             228,000       177,980       225,064          1.3%
    -------------------------------------------------------------------------
    St. John's             217,167       215,000       190,050         14.3%
    -------------------------------------------------------------------------
    Montreal               245,125       240,045       237,855          3.1%
    -------------------------------------------------------------------------
    Ottawa                 332,417       328,667       321,333          3.4%
    -------------------------------------------------------------------------
    Toronto                446,214       437,929       405,917          9.9%
    -------------------------------------------------------------------------
    Winnipeg               241,650       240,875       219,886          9.9%
    -------------------------------------------------------------------------
    Regina                 273,000       273,000       274,167         -0.4%
    -------------------------------------------------------------------------
    Saskatoon              310,500       311,500       300,000          3.5%
    -------------------------------------------------------------------------
    Calgary                412,478       401,944       410,333          0.5%
    -------------------------------------------------------------------------
    Edmonton               299,286       308,571       301,429         -0.7%
    -------------------------------------------------------------------------
    Vancouver              828,750       802,500       743,750         11.4%
    -------------------------------------------------------------------------
    Victoria               474,000       465,000       440,000          7.7%
    -------------------------------------------------------------------------
    National               315,055       309,328       297,111         6.04%
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                        Standard Two Storey
    -------------------------------------------------------------------------
                           Q4 2009    Last Quarter     Q4 2008      2 Storey
    Market                 Average         Avg         Average      % Change
    -------------------------------------------------------------------------
    Halifax                265,333       265,333       260,667          1.8%
    -------------------------------------------------------------------------
    Charlottetown          195,000       190,000       188,000          3.7%
    -------------------------------------------------------------------------
    Moncton                131,000       137,000       126,000          4.0%
    -------------------------------------------------------------------------
    Fredericton            210,000       205,000       210,000          0.0%
    -------------------------------------------------------------------------
    Saint John             299,000       237,905       294,695          1.5%
    -------------------------------------------------------------------------
    St. John's             298,833       296,667       261,800         14.1%
    -------------------------------------------------------------------------
    Montreal               345,789       343,480       308,018         12.3%
    -------------------------------------------------------------------------
    Ottawa                 331,917       327,833       320,083          3.7%
    -------------------------------------------------------------------------
    Toronto                564,175       561,725       544,842          3.5%
    -------------------------------------------------------------------------
    Winnipeg               275,500       265,938       250,529         10.0%
    -------------------------------------------------------------------------
    Regina                 259,000       251,500       245,000          5.7%
    -------------------------------------------------------------------------
    Saskatoon              338,750       340,750       328,750          3.0%
    -------------------------------------------------------------------------
    Calgary                427,067       414,556       417,511          2.3%
    -------------------------------------------------------------------------
    Edmonton               340,557       327,429       344,636         -1.2%
    -------------------------------------------------------------------------
    Vancouver              917,500       904,750       837,500          9.6%
    -------------------------------------------------------------------------
    Victoria               449,000       449,000       433,000          3.7%
    -------------------------------------------------------------------------
    National               353,026       344,929       335,689          5.2%
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                        Standard Condominium
    -------------------------------------------------------------------------
                           Q4 2009    Last Quarter     Q4 2008        Condo
    Market                 Average         Avg         Average      % Change
    -------------------------------------------------------------------------
    Halifax                167,000       186,500       159,500          4.7%
    -------------------------------------------------------------------------
    Charlottetown          122,000       120,000       120,000          1.7%
    -------------------------------------------------------------------------
    Moncton
    -------------------------------------------------------------------------
    Fredericton            145,000       145,000       133,000          9.0%
    -------------------------------------------------------------------------
    Saint John             160,000       136,876       158,283          1.1%
    -------------------------------------------------------------------------
    St. John's             230,333       230,000       203,000         13.5%
    -------------------------------------------------------------------------
    Montreal               216,667       213,278       186,706         16.0%
    -------------------------------------------------------------------------
    Ottawa                 218,167       213,583       207,833          5.0%
    -------------------------------------------------------------------------
    Toronto                309,316       300,632       300,722          2.9%
    -------------------------------------------------------------------------
    Winnipeg               153,929       145,614       133,083         15.7%
    -------------------------------------------------------------------------
    Regina                 185,000       185,000       172,917          7.0%
    -------------------------------------------------------------------------
    Saskatoon              197,500       210,000       186,500          5.9%
    -------------------------------------------------------------------------
    Calgary                256,056       249,500       257,189         -0.4%
    -------------------------------------------------------------------------
    Edmonton               213,380       213,250       206,854          3.2%
    -------------------------------------------------------------------------
    Vancouver              452,750       445,500       405,000         11.8%
    -------------------------------------------------------------------------
    Victoria               265,000       275,000       265,000          0.0%
    -------------------------------------------------------------------------
    National               205,756       204,358       193,474         6.35%
    -------------------------------------------------------------------------
    

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. Current figures will be updated following the complete tabulation of the data for the fourth quarter. A printable version of the fourth quarter 2009 survey will be available online on February 5th, 2010.

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 nearly 14,000 real estate professionals in over 600 locations across Canada. Royal LePage believes in the importance of giving back to the community and is the only Canadian real estate company to have its own charitable foundation. The Shelter Foundation is dedicated exclusively to funding women's shelters and violence prevention and education programs. Royal LePage is managed by Brookfield Real Estate Services, and is part of a brand family that includes Royal LePage, Johnston and Daniel, and La Capitale Real Estate Network. 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.

SOURCE Royal LePage Real Estate Services

For further information: For further information: Tammy Gilmer, Director, Public Relations and National Communications, Royal LePage Real Estate Services, (416) 510-5783; David Kaiser, Senior Vice President, Fleishman-Hillard Canada, (416) 645-3682


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