STRENGTHENING ECONOMIC RECOVERY AND LOW INTEREST RATES POINT TO A STRONGER THAN ANTICIPATED 2011 FOR HOUSING MARKET

Prospect of rising mortgage rates may prompt heightened buyer activity early in the year, according to Royal LePage forecast

TORONTO, Jan. 6 /CNW/ - The average price of a home in Canada increased between 3.9 and 4.6 per cent in the fourth quarter of 2010, compared to the previous year, as markets shrugged off a lackluster third quarter and returned to a post-recession growth profile. Home values are forecast to continue a moderate and steady climb in many of the country's key housing markets through 2011 with sales activity skewed to the first half of the year, according to the Royal LePage House Price Survey and Market Survey Forecast released today.

The low cost of borrowing stimulated the housing market in 2010, and this trend is predicted to continue in the first half of 2011. The widely held consumer belief that rates will rise in the latter part of 2011 may prompt an increase in buying activity early in the year.

"Trends in the housing market continue to be driven by the lingering after-effects of the recession," said Phil Soper, president and chief executive of Royal LePage Real Estate Services. "Canadians realize that interest rates are unsustainably low and that homes will become effectively more expensive when mortgage rates return to normal levels. We will likely see more price appreciation early in 2011 as some buyers complete transactions in advance of anticipated higher borrowing costs."

Soper added, "2011 is expected to unfold much like 2010, when close to 60 per cent of sales volume occurred in the first half of the year in anticipation of interest rate increases that never materialized. However, housing market activity in the first half of 2011 will be modestly closer to the norm, as last year's phenomenon was exacerbated by mid-year tightening of mortgage accessibility and the introduction of HST in Ontario and British Columbia."

Regionally, the strongest price appreciation of the cities studied is expected in mid-sized urban centers where affordability is better than the national average. For example, in Winnipeg, St. John's and Fredericton, two-storey homes below $300,000 are still widely available. Demand in these cities is expected to be strong, putting upward pressure on home values.

Cities in Alberta are expected to be among Canada's strongest performing markets in 2011. Woes in the historically volatile region's housing market stretch approximately five years, when the Alberta housing market suffered a sharp correction following several years of double-digit price increases.  The province's energy-driven economy staged a comeback in 2010, recovering from the recession-led plunge in oil and gas prices. Major employers are expected to steadily increase hiring in 2011 which should attract new residents to the province and put upward pressure on the limited supply of housing. Royal LePage forecasts the average price of a home in Calgary will increase 5.4 per cent through 2011 while Edmonton home prices will increase 3.3 per cent. Home sale transactions are predicted to rise 6.7 per cent in Calgary and 9.1 per cent in Edmonton over the same period.

Across Canada, the average price of a home is forecast to rise 3 per cent over the coming year to $348,600 while the number of transactions is expected to drop 2 per cent.

During the fourth quarter of 2010, average home prices either increased or stabilized year-over-year, with Winnipeg, Ottawa, Montreal and St. John's seeing the biggest gains.  Nationally, the average price of detached bungalows rose to $324,531 (up 4.6 per cent), the price of standard two-storey homes rose to $360,329 (up 4.4 per cent), and the price of standard condominiums rose to $226,746 (up 3.9 per cent), compared to the fourth quarter of 2009.

Mr. Soper continued, "Like many Canadians, we anticipated an end to the ultra-low interest rate era before year-end 2010.  Paradoxically, global economic weakness, particularly in the United States, allowed policy makers and financial institutions to keep borrowing costs low, resulting in a stronger Canadian housing market and a better than forecast fourth quarter."

REGIONAL MARKET SUMMARIES

The residential real estate in market in St. John's, Newfoundland saw strong year-over-year price gains across all three housing types surveyed every quarter this year. However, market has showed signs of cooling as inventory starts to rise. 

Detached bungalows and two-storey houses in Montreal saw an 8.7 per cent year-over-year increase in the fourth quarter, while standard condominiums jumped 11.3 per cent. Average prices in Montreal are forecast to increase by a more modest 3 per cent in 2011 as a more balanced market emerges.

Ottawa's housing market saw year-over-year price appreciation ranging between 6.3 and 10 per cent across all housing types surveyed this quarter. However, as inventory grows, Ottawa can expect price increases to be closer to 4 percent in 2011.

House prices surveyed in Toronto increased modestly year-over-year. Standard two-storey homes witnessed the largest increases at 5.6 per cent. Market activity slowed in the second half of the year as buyers rushed to the market in the first half of the year in anticipation of interest rate hikes and HST. For 2011, price increases are expected to be very modest at approximately 1 per cent.

Detached bungalows, standard two-storey homes, and standard condominiums in Winnipeg witnessed strong year-over-year price gains this quarter. Detached bungalows performed the strongest, increasing 10.3 per cent compared to the fourth quarter of 2009. Although the market is showing signs of cooling, sellers are still seeing multiple offers and are often receiving higher than their asking price. Winnipeg is expected to maintain its momentum throughout 2011 with prices rising around 7 per cent.

Single family homes performed best in Regina, which saw standard two-storey homes increase 9.1 per cent, while detached bungalows rose 8.4% and standard condominiums increased 2.4 per cent. Prices in Regina are expected to increase an overall average of 5 percent in 2011.

Both Calgary and Edmonton are positioned for house price increases in 2011 with a rebounding energy sector. In 2010, Calgary witnessed moderate year-over-year price depreciation across all housing types surveyed. Edmonton saw more modest price depreciation for two-storey houses, while condominiums decreased 5.7 per cent. Detached bungalows witnessed the only price increase among housing types surveyed at 1.2 per cent.

Single family homes in Vancouver dominated house price gains as two-storey houses rose year-over-year by 9.8 per cent in 2010. Condominiums on the East Side performed particularly well and, on average, Vancouver's standard condominium market rose 7 per cent. Vancouver prices are expected to increase 3.7 per cent in 2011.

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

  Detached Bungalows Standard Two Storey Standard Condominium  
Market  Q4 2010 Average Last Quarter Avg Q4 2009
Average
Bungalow
%
Change
Q4 2010 Average Last Quarter Avg Q4 2009 Average 2 Storey
%
Change
Q4 2010 Average Last Quarter Avg Q4 2009 Average Condo % Change
Halifax 255,967 254,667 238,000 7.5% 291,000 287,000 265,333 9.7% 180,000 176,000 167,000 7.8%
Charlottetown 165,000 162,000 160,000 3.1% 198,000 196,000 195,000 1.5% 125,000 125,000 122,000 2.5%
Moncton 152,000 158,000 152,300 -0.2% 134,900 137,900 131,000 3.0%        
Fredericton 192,000 187,000 182,000 5.5% 205,000 205,000 210,000 -2.4% 155,000 155,000 145,000 6.9%
Saint John 184,000 228,000 201,476 -8.7% 245,000 299,000 268,000 -8.6% 158,000 137,238 158,283 -0.2%
St. John's 238,793 228,025 217,167 10.0% 327,627 313,775 298,833 9.6% 256,023 241,850 230,333 11.2%
Montreal 265,383 257,406 244,188 8.7% 375,222 363,139 345,178 8.7% 240,000 226,914 215,722 11.3%
Ottawa 353,333 346,417 332,417 6.3% 354,083 345,167 331,917 6.7% 240,000 229,500 218,167 10.0%
Toronto 481,733 475,867 467,133 3.1% 594,231 578,119 562,929 5.6% 331,525 331,488 319,300 3.8%
Winnipeg 266,500 263,125 241,650 10.3% 296,750 287,188 279,000 6.4% 170,286 163,857 158,000 7.8%
Regina 296,000 293,000 273,000 8.4% 282,500 274,000 259,000 9.1% 189,500 184,500 185,000 2.4%
Saskatoon 331,250 328,750 310,500 6.7% 359,250 350,000 338,750 6.1% 230,000 230,000 216,667 6.2%
Calgary 392,167 412,744 412,478 -4.9% 404,622 410,489 427,067 -5.3% 250,311 246,656 256,056 -2.2%
Edmonton 305,000 312,143 301,429 1.2% 334,286 338,571 341,986 -2.3% 201,833 200,000 214,047 -5.7%
Vancouver 891,500 873,500 828,750 7.6% 1,007,500 977,250 917,500 9.8% 484,500 488,500 452,750 7.0%
Victoria 490,000 490,000 474,000 3.4% 480,000 470,000 449,000 6.9% 285,000 275,000 265,000 7.5%
National 324,531 329,415 314,780 4.6% 360,329 368,843 345,143 4.4% 226,746 227,433 221,555 3.9%

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 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 2010. A printable version of the fourth quarter 2010 survey will be available online on February 4th, 2011.

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.

SOURCE Royal LePage Real Estate Services

For further information:

David Kaiser
Senior Vice President
Fleishman-Hillard Canada
416-645-3682

Tammy Gilmer
Director, Public Relations and National Communications
Royal LePage Real Estate Services
416-510-5783


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