Early spring-like weather jump starts housing market activity
TORONTO, April 5, 2012 /CNW/ - The Royal LePage House Price Survey released today showed the average price of a home in Canada increased between 2.2 and 5.0 per cent in the first quarter of 2012, compared to the previous year.
Market activity in the first quarter of 2012 was unusually high resulting in tight inventories and strong price appreciation in most major cities. Buyers were attracted into the market by historically low mortgage rates and sellers brought listing inventory to market earlier than normal, encouraged by unseasonably warm weather.
In the first quarter, standard two-storey homes rose 5.0 per cent year-over-year to $398,282, while detached bungalows increased 4.4 per cent to $356,306. Average prices for standard condominiums increased 2.2 per cent to $243,153.
"Our housing market is being pulled in opposite directions by opposing economic forces," said Phil Soper, president and chief executive of Royal LePage Real Estate Services. "On one hand, there is the rapidly strengthening U.S. economy, increasing Canadian consumer confidence and what can only be called a national mortgage sale encouraging activity and bidding up home prices. On the other, we have signs of over-shooting values and strained affordability in our largest cities. We are likely to see much more modest price appreciation as the year unfolds."
Price appreciation and strong unit sales reflect Canadians taking advantage of borrowing rates that for the first time fell below 3.0 per cent for a five year fixed mortgage and a banking environment that the Royal Bank of Canada has referred to as "hyper-competitive."
Soper commented that the effect of low mortgage rates is more pronounced in cities that are affordable such as Winnipeg, Ottawa and St. John's.
"In Vancouver, the average price of a standard two-storey home is now $1,182,250. Although the city posted strong year-over-year price gains in the first quarter, we expect to see Vancouver's housing market to reach a level of price resistance. Although desirability is high, many potential buyers have simply been pushed out of the market and cannot take advantage of low mortgage rates, which will ease demand and should bring price relief," said Soper.
In comparison, Soper commented that he did not expect price resistance to affect Toronto's housing market where a standard two-storey home would sell for $645,467.
Another notable exception was Calgary whose flat year-over-year house price appreciation masked a very active housing market that witnessed double digit growth in unit sales compared to the same period in 2011.
Across the country, consumers sought to buy into what they believe is a good investment market. The Conference Board of Canada's consumer confidence index continued to rise in March, gaining 4.3 points to stand at 79.5, its third consecutive month of gains, and attitudes towards major purchases, such as real estate, were particularly strong.
Soper concluded, "Generally when the market witnesses a surge in unit sales activity in the first half of the year, it borrows from the second half as potential buyers jump in early to take advantage of a favourable environment."
Regional Market Summaries
Cities in Atlantic Canada all witnessed price appreciation with the exception of Moncton where house prices remained flat year-over-year. The strongest year-over-year price appreciation was found in St. John's, Newfoundland where the average house price increased between 7.0 and 9.9 per cent.
Montreal witnessed an increase in average year-over-year price gains across the housing types surveyed. The largest gains were seen in standard two-storey homes, which rose 4.9 per cent year-over-year.
Ottawa's stable local economy continued to produce healthy gains as the average house price appreciated between 6.0 and 6.2 per cent year-over-year across the three house types surveyed. The average price of a standard two-storey home is $387,833.
Toronto's lack of inventory in a low mortgage rate environment produced strong year-over-year price appreciation in the first quarter of 2012. Detached bungalows and standard two-storey homes increased by 5.5 and 7.5 per cent respectively. On average, standard condominiums appreciated a healthy 3.5 per cent year-over-year demonstrating continued demand despite concerns of ample supply.
Considered Canada's most affordable city with a diversified economy, Winnipeg's housing market benefitted from low mortgage rates as all three housing types posted substantial price gains. Standard condominiums, generally the most affordable housing type, witnessed a considerable year-over-year price gain rising 11.2 per cent - the largest price gain of any housing type across Canada.
Regina saw strong price appreciation across all housing types surveyed confirming that it is still in a seller's market. Detached bungalows made the largest gains, increasing 10.7 per cent year-over-year to $316,500.
Despite double digit unit sales growth, Calgary's housing market remained generally flat in the first quarter due to ample housing supply. Average prices for detached bungalows increased a modest 1.9 per cent year-over-year due to a lack of inventory. However, Calgary's standard two-storey homes and standard condominiums witnessed modest price declines of 1.2 and 2.6 per cent, respectively, as demand was met with a sufficient amount of listings. Edmonton, posted healthy gains for both detached bungalows and standard two-storey homes, which rose 4.6 and 3.4 per cent year-over-year. Prices for standard condominiums remained flat compared to the same period last year.
Vancouver posted strong price appreciation for detached bungalows and standard two-storey homes, while condominiums remained flat compared to the first quarter of 2011.
Royal LePage's quarterly House Price Survey shows the annual change of prices for key housing segments in select national markets.
|Detached Bungalows||Standard Two Storey||Standard Condominium|
|Market|| Q1 2012
| Q1 2011
| Q1 2012
| Q1 2011
| 2 Storey
| Q1 2012
| Q1 2011
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 first quarter 2012. A printable version of the first quarter 2012 survey will be available online on May 2, 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.
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