Soft landing underway in most Canadian real estate markets

 Royal LePage reports slowed price appreciation across the country, with notable exceptions

TORONTO, April 15, 2015 /CNW/ - As the 2015 spring market gets underway, Canada's real estate market is experiencing a soft landing, characterized by slower than normal home price increases. Much higher price increases were observed in the country's two largest urban markets, which combined to send the national average values upwards, partially obscuring the broader national trend.

According to the Royal LePage House Price Survey released today, the average price of a home in Canada rose between 3.8 per cent and 6.6 per cent year-over-year in the first quarter. When broken out by housing type, the survey showed a year-over-year average price increase of 5.3 per cent to $451,463 for standard two-storey homes, while detached bungalows rose 6.6 per cent to $405,895. During the same period, the average price of standard condominiums climbed 3.8 per cent to $261,782.

The steady softening of prices in most markets across the country was first observed in the mid-year 2014 Royal LePage House Price Survey. In recent months, two unanticipated factors disrupted the natural housing price cycle: the steep decline in oil prices late in 2014 and the Bank of Canada's subsequent reaction in lowering the overnight rate early in 2015. 

"Canadian home buyers, with the last decade's recession still top of mind, have been very sensitive to shifting, broad economic factors. The oil shock has been unsettling for the national economy, consumer confidence and by extension, the housing market," said Phil Soper, president and chief executive, Royal LePage.  "That said, lower prices at the pump and the confidence boosting move by the central bank to lower interest rates have been supportive. With these factors combined, we have a soft-landing for housing after several years of robust expansion. We define a soft-landing as a market in which home prices are flat or increasing slightly, giving the economy and family incomes, a chance to catch up."

"On balance, we believe we will not be seeing the kind of appreciation observed over the last three years any time soon, as markets work through the current cycle and align with broader economic conditions," continued Soper. "In terms of downside risk, we do not foresee a sharp decline in home prices, particularly in today's low interest rate environment."

Shifting consumer confidence was a mixed bag during the first quarter. In February, the Conference Board of Canada's Index of Consumer Confidence showed weakening support for major purchase decisions, in the aftermath of major retailer closings, among other factors. The Bloomberg/Nanos Research Canadian Confidence Index trended higher late in the quarter, on improved job security and personal finances sentiment. Without clear strength or weakness, this neutral confidence data reveals a more cautious real estate consumer and tempered demand in most regions of the country.

South of the border, Canada's largest trading partner began 2015 on the strength of the best year for employment growth since 1999. The probability of rising interest rates, and a commensurate drag on the housing market, became a reality as U.S. policy makers debated the need to temper inflationary forces in the wake of the expansion of the American workforce. Then late in the quarter, the U.S. Bureau of Labor Statistics reported that the pace of the expansion had slowed considerably, with employment growth failing to meet expectations.

"While Canadian monetary policy is independent of our southern neighbour's, interest rates in both countries are highly correlated," said Soper. "The slower pace of American growth we witnessed in March will indirectly support our housing market here, as the risk of a near-term rise in mortgage rates has been reduced considerably."

Ongoing economic turmoil in Calgary has pushed the city out of the top three fastest appreciating housing markets into a more moderate zone of below national average price increases. During the same period, Regina posted year-over-year price declines in the detached home category, while Saskatoon remained relatively flat. Meanwhile Toronto and Vancouver both posted at or near double-digit year-over-year price increases across all housing types surveyed, with Greater Toronto Area cousin Hamilton posting comparable gains.

"Supply shortages in key parts of the Greater Toronto Area and Vancouver are driving up local prices in an intensified fashion, but these are the exception, not the rule. The rest of the country is experiencing a much more subdued residential real estate climate. Even a closer look at surrounding areas of Vancouver reveals that mountain-steep appreciation rates are not a B.C.-wide phenomenon," added Soper.

"What's essential to note is that Canada is a market of markets, each responding to a combination of local and national factors, where there are even notable differences in market activity between housing types and segments within the same vicinity. In particular, we will be keeping a close eye on the luxury segment, where in Toronto and Vancouver demand is among the highest on record, while dropping to a standstill in Calgary – one of the most dramatic contrasts we have seen between cities that for the last year have been on a parallel trajectory," concluded Soper.

Regional Market Summaries

Halifax saw a price appreciation in all housing types in the first quarter of 2015. Standard condominiums increased 5.0 per cent year-over-year to $230,000, continuing the trend seen at the end of last year. Standard two-storey homes jumped by 2.7 per cent to $334,667 and detached bungalows increased modestly by 0.7 per cent to $297,667.

A broad selection of available inventory has led to a mild buyers' market in St. John's heading into the spring real estate market. The average price for a standard two-storey home increased by 1.8 per cent year-over-year to $407,667. Standard condominiums rose 1.7 per cent to $320,833 and detached bungalows gained 1.4 per cent to $300,100.

Montreal saw a relatively flat market in the first quarter of 2015, with the average price of detached bungalows increasing 0.7 per cent year-over-year to $296,546. The price of standard condominiums rose slightly with a 1.3 per cent increase to $242,778, while standard two-storey homes saw a decrease of 1.5 per cent to $399,964.

A delayed start in the Ottawa housing market led to a relatively flat first three months of the year, although quality listings continue to find buyers. The average price for standard two-storey homes and detached bungalows increased 2.0 per cent and 1.9 per cent year-over-year to $407,000 and $404,167, respectively. Standard condominiums also saw a modest increase in average prices, rising 1.4 per cent to $262,167. 

Toronto bucked the national trend of moderating price appreciation due to high demand and a continued lack of inventory. The average price for detached bungalows jumped 10.2 per cent year-over-year to $655,669, which was followed closely by standard two-storey homes, which were up 9.2 per cent to $803,794. Standard condominiums also experienced strong price growth during the quarter, increasing 7.0 per cent to an average price of $395,584.

An upswing in inventory resulted in varied levels of activity across the Winnipeg housing market where the average price for standard two-storey homes saw a strong year-over-year increase rising 5.5 per cent to $342,880.  Meanwhile, detached bungalows and standard condominiums both fell on a year-over-year basis, dropping 0.6 per cent to $304,534 and 5.0 per cent to $195,905, respectively. 

The Regina housing market turned in the favour of buyers due to a continued imbalance between demand and supply as the average price for single-family homes depreciated in the first quarter, with detached bungalows dropping 5.4 per cent year-over-year to $306,500 and standard two-storey homes declining 1.8 per cent to $349,500. Standard condominiums meanwhile remained relatively flat, increasing 0.7 per cent to $216,500 over the same period.

The Calgary housing market slowed visibly in the first quarter as low oil prices significantly curtailed activity. As a result, price appreciation seen during the quarter was far milder than the significant year-over-year price increases experienced throughout 2014. The average price for detached bungalows increased 3.8 per cent to $498,400, while standard two-storey homes increased 1.7 per cent to $480,656. Standard condominiums recorded moderate growth of 2.9 per cent to $286,913

Edmonton's residential real estate market was impacted by the drop in oil prices, as uncertainty stopped many would-be buyers and sellers from entering the market. While fewer homes traded hands, the three major housing categories saw average prices increase on a year-over-year basis, with detached bungalows showing the strongest gain of 6.8 per cent to $364,906. Over the same period standard two-storey homes rose 5.5 per cent to $391,378 and standard condominiums gained 3.1 per cent to $231,093.

Ongoing high demand combined with a healthy supply led to an increase in first quarter activity in Canada's most expensive real estate market. The average price for detached bungalows and standard two-storey homes in Vancouver both saw double digit year-over-year growth, soaring 10.6 per cent to $1,174,509 and 10.3 per cent to $1,267,287, respectively. Over the same timeframe, standard condominiums saw more moderate price appreciation, jumping 4.9 per cent to an average price of $506,624

Royal LePage's quarterly House Price Survey shows the year-over-year change in prices for key housing segments in select national markets.


Detached Bungalows

Standard Two-Storey

Standard Condominium


Market

Q1 2015
Average

Last
Quarter
Avg

Q1 2014
Average

Bungalow
% Change

Q1 2015
Average

Last
Quarter
Avg

Q1 2014
Average

2 Storey
%
Change

Q1 2015
Average

Last
Quarter
Avg

Q1 2014
Average

Condo
%
Change

Halifax

297,667

297,633

295,500

0.7%

334,667

333,500

325,933

2.7%

230,000

220,500

218,950

5.0%

Charlottetown

174,000

174,000

173,000

0.6%

207,000

205,000

205,000

1.0%

130,000

128,000

130,000

0.0%

Fredericton

202,000

202,000

203,000

-0.5%

210,000

210,000

215,000

-2.3%

154,000

147,000

151,000

2.0%

Moncton

146,800

150,796

153,000

-4.1%

148,950

151,622

135,000

10.3%





Saint John

172,845

172,935

181,425

-4.7%

252,250

239,600

278,145

-9.3%

197,100

163,985

213,427

-7.6%

St. John's

300,100

316,333

296,000

1.4%

407,667

428,000

400,333

1.8%

320,833

335,133

315,333

1.7%

Montreal

296,546

297,300

294,557

0.7%

399,964

402,321

406,179

-1.5%

242,778

241,983

239,561

1.3%

Ottawa

404,167

404,708

396,500

1.9%

407,000

407,440

399,167

2.0%

262,167

258,817

258,500

1.4%

Toronto

655,669

659,254

594,714

10.2%

803,794

767,393

735,868

9.2%

395,584

390,488

369,714

7.0%

Hamilton

272,187

248,667

234,127

16.3%

329,816

325,554

301,289

9.5%





Winnipeg

304,534

303,987

306,507

-0.6%

342,880

336,328

325,072

5.5%

195,905

207,709

206,291

-5.0%

Regina

306,500

310,000

324,000

-5.4%

349,500

345,000

356,000

-1.8%

216,500

223,500

215,000

0.7%

Saskatoon

365,750

359,000

363,750

0.5%

396,000

401,750

393,500

0.6%

277,000

275,333

265,000

4.5%

Calgary

498,400

511,889

480,222

3.8%

480,656

500,320

472,644

1.7%

286,913

294,725

278,713

2.9%

Edmonton

364,906

373,244

341,651

6.8%

391,378

397,045

371,000

5.5%

231,093

250,953

224,250

3.1%

Vancouver

1,174,509

1,124,642

1,062,318

10.6%

1,267,287

1,233,182

1,148,473

10.3%

506,624

511,150

482,800

4.9%

Victoria

474,800

470,580

467,000

1.7%

477,000

474,575

471,000

1.3%

266,500

258,213

257,000

3.7%

National

405,895

406,218

380,765

6.6%

451,463

443,379

428,943

5.3%

261,782

257,624

252,174

3.8%

 

About the Royal LePage House Price Survey

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. 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 90 communities across the country. A complete database of past and present surveys is available on the Royal LePage website at www.royallepage.ca. Current figures will be updated following the complete tabulation of the data for the first quarter of 2015. A printable version of the first quarter 2015 survey will be available online on May 15, 2015. Housing values in the Royal LePage House Price 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.

About Royal LePage

Serving Canadians since 1913, Royal LePage is the country's leading provider of services to real estate brokerages, with a network of over 16,000 real estate professionals in more than 600 locations nationwide. Royal LePage is the only Canadian real estate company to have its own charitable foundation, the Royal LePage Shelter Foundation, dedicated to supporting women's and children's shelters and educational programs aimed at ending domestic violence. Royal LePage is a Brookfield Real Estate Services Inc. company, a TSX-listed corporation trading under the symbol TSX:BRE.

For more information visit: www.royallepage.ca.

SOURCE Royal LePage Real Estate Services

For further information: Ray McIlroy, Kaiser Lachance Communications, 647-680-8316, ray.mcilroy@kaiserlachance.com


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890