Lack of inventory, low interest rates and economic stability drive Toronto's seller's market
TORONTO, July 10, 2012 /CNW/ - The Royal LePage House Price Survey and Market Survey Forecast released today showed strong year-over-year price gains for housing types surveyed in Toronto due to a lack of inventory and continued strong demand supported by low interest rates.
Detached bungalows witnessed the largest year-over-year price increase at 8.3 per cent to $560,187. Prices for standard two-storey homes rose 7.3 per cent year-over-year to $668,829, while standard condominiums saw an increase of 5.5 per cent to $363,588.
"Inventory continues to be a challenge for those looking to buy a house in Toronto. The low number of listings has contributed to a substantial pipeline of demand," said Gino Romanese, senior vice president, Royal LePage Real Estate Services Ltd. "We are seeing lots of multiple offers as well as preemptive offers on well-priced, turn-key homes in desirable areas."
In regards to recent mortgage rule changes, Romanese commented that "although a segment of potential buyers will be put on the sidelines, these changes will not greatly affect Toronto's housing market."
According to Royal LePage Real Estate Services, the average year-over-year house price in Toronto is expected to climb 8 per cent in 2012, while unit sales are expected to increase 1 per cent largely due to lack of inventory, economic stability and the expectation of continued low interest rates for the remaining of the year.
Nationally, in the second quarter, standard two-storey homes rose 4.7 per cent year-over-year to $408,423, while detached bungalows increased 5.5 per cent to $376,311. Average prices for standard condominiums increased 3.3 per cent to $245,825. During this period, signs from across the country clearly indicated that the national housing market was at a turning point, with some major regions continuing to grow unabated while others peaked and began to pull back for the first time in three years.
"We have had three years of solid house price appreciation in almost all regions of the country," said Phil Soper, president and CEO of Royal LePage Real Estate Services. "Confidence in Canada's real estate market is sound, but home prices cannot grow faster than salaries and the underlying economy indefinitely. Some regions have reached or perhaps even exceeded the current upper level of price resistance as buyers have embraced an era of historically low mortgage rates."
The first-time buyer segment of the population, which represents up to half or all transactions and where activity strongly correlates to low interest rates, is expected to be slowed by recent regulatory changes that will reduce access to insured mortgages.
"The most recent set of mortgage changes, the fourth in four years, is also the most aggressive. The cumulative impact of these new regulations has created a significantly higher hurdle for young buyers seeking their first home and comes at a time when the market was slowing of its own accord. The timing of this intervention was unfortunate," added Soper.
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 Web site at www.royallepage.ca. Current figures will be updated following the complete tabulation of the data for the second quarter 2012. A printable version of the second quarter 2012 survey will be available online on August 9, 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.
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 symbolTSX:BRE.
For more information, visit www.royallepage.ca.
For further information:
Director, Global Communications & Public Relations
Royal LePage Real Estate Services