Sustained increase of Montreal house prices in the fourth quarter expected to stabilize in 2012

While first-time buyers and consumer confidence helped push prices up, larger inventories and an anticipated decline in demand should stabilize prices in coming months

MONTREAL, Jan. 12, 2012 /CNW/ - The Royal LePage House Price Survey and Market Survey Forecast released today point to a sustained year-over-year rise in fourth quarter Montreal Island house prices. First-time buyers again made their presence felt during the last quarter. This factor, together with consumer confidence in the economy - and in the real estate market, in particular - explains the observed price increase. Royal LePage expects the Montreal real estate market to be more balanced in the coming year, and house prices to stabilize.

Over the fourth quarter, the average price of detached bungalows rose 3.7% to $283,000. The average price of standard two-storey homes rose 0.2% to $362,000, and that of a standard condominium rose 4.8% to $239,000.

"Though we saw an increase in the prices of detached bungalows, standard condominiums and standard two-storey homes, the increase in the latter was much more modest. The small increase observed for standard two-storey homes can be explained by a roughly 11% increase in inventory and a large number of first-time buyers looking primarily for more affordable homes," notes Dominic St-Pierre, Director, Royal LePage Real Estate Services for the Quebec region.

"As for the number of units sold, detached bungalows saw a 13.6% decline, in contrast to an increase of 2.1% and 7.8% for standard two-storey homes and standard condominiums, respectively. The ratio of standard condominium sales to standard two-storey home sales was nearly 3 to 1," explains Dominic St-Pierre.

The inventory of homes for sale on Montreal Island increased by nearly 15% year-over-year. "The biggest increase here is in standard condominiums, which have gone up almost 20%. The inventory for detached bungalows is very similar to what it was last year. Standard two-storey homes, on the other hand, have increased by 11%," St-Pierre explains. "While the demand for standard condominiums is high, the price hasn't gone up dramatically. That can be explained by the fact that supply follows demand, stabilizing prices. Indeed, while in Montreal we see more standard condominiums for sale than all other types of single-family homes combined, demand is keeping pace," adds Dominic St-Pierre.

As Mr. St-Pierre points out, house prices should continue to rise in 2012, but the increase will be modest, at about 1.3 percent. "Prices climbed sharply in early 2011. But the increase slowed as the year went along, and this should continue in 2012. We expect a drop of about 2.1 percent in the number of units sold. As for inventory, it should continue to rise, mainly in the first half of 2012, and then slow down and level off in the second half of the year. We should therefore see a more balanced real estate market in the coming year," he explains.

According to St-Pierre, consumer confidence will be the key factor influencing the real estate market. "Despite recent news about the unemployment rate, Quebec is in a good economic position right now, and we see the same thing in Canada. Consumers will therefore be influenced by what's happening outside the country. Europe is still grappling with serious economic problems. The situation in the United States appears to be stabilizing, and the real estate market and economy seem to be gradually recovering. So it's the markets in Europe and the United States that will influence consumer confidence in the real estate market," he concludes.

Canadian House Price Survey for the Fourth Quarter of 2011

Average home prices

Detached bungalow
Market Average
Q4 2011
Last
Quarter
Average
Average
Q4 2010
Difference
(%)
Detached
bungalow
Beaconsfield 307,500 307,000 315,000 -2.4%
Dorval 290,000 290,000 261,500 10.9%
Pierrefonds 288,500 287,000 290,000 -0.5%
Westmount n/a n/a n/a n/a
Notre-Dame-de-Grâce/Côte-des-Neiges n/a n/a n/a n/a
Ville-Marie n/a n/a n/a n/a
Le Plateau Mont-Royal n/a n/a n/a n/a
Rosemont/La Petite Patrie n/a n/a n/a n/a
Laval 271,000 263,000 268,000 1.1%
Brossard 255,000 235,000 276,000 -7.6%
Longueuil 240,000 233,000 229,500 4.6%
Boucherville 286,500 310,000 270,500 5.9%
Montreal 283,000 275,000 272,929 3.7%

*Type of property not covered in the sector

Standard Two-Storey Home
Market Average
Q4 2011
Last
Quarter
Average
Average
Q4 2010
Difference
(%)
Two-storey
Home
Beaconsfield n/a n/a n/a n/a
Dorval 277,500 286,000 325,000 -14.6%
Pierrefonds 390,000 385,000 341,750 14.1%
Westmount n/a n/a n/a n/a
Notre-Dame-de-Grâce/Côte-des-Neiges 470,000 488,000 458,000 2.6%
Ville-Marie n/a n/a n/a n/a
Le Plateau Mont-Royal n/a n/a n/a n/a
Rosemont/La Petite Patrie n/a n/a n/a n/a
Laval 320,000 335,000 350,000 -8.6%
Brossard 357,500 369,000 333,500 7.2%
Longueuil 338,250 335,000 306,500 10.4%
Boucherville 370,000 392,500 414,500 -10.7%
Montreal 362,000 367,500 361,321 0.2%

*Type of property not covered in the sector

Standard Condominium
Market Average
Q4 2011
Last
Quarter
Average
Average
Q4 2010
Difference (%)
Condominium
Beaconsfield n/a n/a n/a n/a
Dorval n/a n/a n/a n/a
Pierrefonds 203,000 206,000 213,000 -4.7%
Westmount n/a n/a n/a n/a
Notre-Dame-de-Grâce/Côte-des-Neiges 241,250 245,000 240,000 0.5%
Ville-Marie 305,000 322,000 303,500 0.5%
Le Plateau Mont-Royal 307,750 317,000 310,250 -0.8%
Rosemont/La Petite Patrie 254,250 262,000 242,000 5.1%
Laval 190,000 191,000 189,750 0.1%
Brossard 192,500 195,000 182,000 5.8%
Longueuil 168,000 177,500 176,000 -4.5%
Boucherville 204,000 211,500 196,000 4.1%
Montreal 239,000 236,333 228,056 4.8%

*Type of property not covered in the sector

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 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 end of the fourth quarter. A printable version of the fourth quarter 2011 survey will be available online on February 10, 2012.

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. Historical data is available for some areas back to the early 1970s.

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 14,000 real estate professionals in over 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 & 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 or www.brookfieldres.com

SOURCE Royal LePage Real Estate Services

For further information:

Stéphanie Panneton
Fleishman Hillard Inc.
514.866.6776, ext. 320
stephanie.panneton@fleishman.ca

Tammy Gilmer
Director, Public Relations and National Communications
Royal LePage Real Estate Services
416.510.5783


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