Market activity down as both buyers and sellers were prepared to wait
TORONTO, Jan. 8, 2013 /CNW/ - The Royal LePage House Price Survey and Market Survey Forecast released today showed strong year-over-year price gains in the fourth quarter for most housing types surveyed in Toronto due to strong demand relative to inventory.
Standard two-storey homes witnessed the largest year-over-year price increase at 6.2 per cent to $668,133. Prices for detached bungalows rose 4.9 per cent year-over-year to $558,345, while standard condominiums saw an increase of 2.6 per cent to $356,865.
"In the third and fourth quarters of 2012, we began to see a disconnect between buyers and sellers," said Gino Romanese, senior vice president, Royal LePage Real Estate Services Ltd. "Buyers had been regularly exposed to news that made them cautious about purchasing a property with the concern that prices might drop. However, sellers generally did not share that view and were prepared to wait it out in anticipation of the upcoming and traditionally much busier first and second quarters of the year."
In 2013, Royal LePage expects that real estate values in Toronto will increase a more modest 1.0 per cent compared to 2012. Romanese noted that the forecast reflects an average of two different housing markets in Toronto.
"The pipeline of buyers in Toronto seeking single-family homes will remain strong throughout 2013, however, we do expect to see some softening in the condo market," noted Romanese. Romanese added that older condos, which are generally larger, and more specifically those that are in more desirable areas, will likely out-perform newer units that target investors and young professionals given the availability of such product.
"Most real estate decisions are based on life events such as the establishing of new households, growing family requirements, downsizing or retirement. As the market remains stable through the first half of 2013, I expect both sellers and buyers to come off the fence as they realize that significant price increases or decreases are not likely to happen," added Romanese.
Nationally, the average price of a home increased year-over-year between 2.0 and 4.0 per cent in the fourth quarter of 2012. In the fourth quarter, standard two-storey homes rose 4.0 per cent year-over-year to $390,444, while detached bungalows increased 3.6 per cent to $356,790. National average prices for standard condominiums increased 2.0 per cent to $239,374.
As home sales volumes slowed in the second half of 2012, the average Canadian house price, for the most part, held firm. Some consumers delayed their entry into the market during 2012, faced with economic uncertainty as governments in both the U.S. and Europe struggled with debt management plans and as homes in some regions became less affordable. Compared to 2012, fewer homes are expected to trade hands in the first half of 2013, which should slow the pace at which home prices are rising.
Phil Soper, president and chief executive, Royal LePage, noted that the housing market is well into a cyclical correction and that fears of a sharp or drawn out collapse are unwarranted. Home prices have risen faster than salaries and wages for three years and the market requires time to adjust. By the end of 2013, Royal LePage expects the average national home price to be 1.0 per cent higher compared to 2012.
"A helpful comparison is to reflect on the beginning of 2009 when the country was in the grips of a very grim global recession," said Soper. "It was a bleak time, with plunging consumer confidence driven by rapidly spreading unemployment. The meltdown of the American banking and finance sector had sent their housing market into a downward spiral and our own real estate market saw home sale transactions fall dramatically. Price appreciation in Canada ground to a halt, but home values dropped only slightly. With economic fundamentals such as employment levels improving, we expect this cyclical correction to be short-lived."
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 fourth quarter 2012. A printable version of the fourth quarter 2012 survey will be available online on February 6, 2013.
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.
SOURCE: Royal LePage Real Estate Services
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