Economic uncertainty and tightened mortgage rules keep buyers on the sidelines
VANCOUVER, July 9, 2013 /CNW/ - The Royal LePage House Price Survey and Market Survey Forecast released today showed year-over-year price decreases across all housing types surveyed in Vancouver.
Standard condominium prices decreased by 3.3 per cent year-over-year to $490,475, while detached bungalows decreased 3.2 per cent to $1,052,500. Standard two-storey home prices also saw a moderate drop of 2.3 per cent to $1,151,250. Interestingly, however, this represents an upward trend when compared to the first quarter of 2013, where price decreases were greater than 5.0 per cent across the board.
"The recent changes in mortgage rules have affected a number of buyer groups," said Bill Binnie, broker and owner of Royal LePage North Shore. "First-time buyers can't enter the market as easily and investors are less able to meet the new equity requirements."
According to brokers in the region, the political and economic environment also contributed to sluggish prices early in the quarter. "Buyers were uncertain about the economic outlook in the lead up to the recent provincial election," said Chris Simmons, broker and owner of Royal LePage Westside. "Tightened immigration policies have also been a factor. Our market is largely fueled by immigration and reductions quickly show up in prices and activity levels."
Looking ahead, Royal LePage forecasts that home prices in Vancouver will rise by approximately 2.0 per cent in 2013. "Buyers are starting to gain more confidence in the economic and political future," added Binnie. "As they start to re-enter the market, prices will begin to rise again."
Nationally, in the second quarter, standard two-storey homes and detached bungalows both showed a year-over-year average price increase of 2.7 per cent to $419,614 and $386,547, respectively. Average prices for standard condominiums showed a more modest increase during the same period, rising 1.2 per cent to $248,750. Royal LePage forecasts that house prices will see modest gains throughout the remainder of 2013, projecting a 3.0 per cent increase for the full year when compared to 2012.
Dialogue concerning the direction of Canada's housing market has remained front and centre in recent months. Changes to Canada's mortgage lending rules in mid-2012 coupled with concerns about consumer debt levels, housing affordability in cities like Toronto and Vancouver and continued international economic uncertainty have prompted a number of analysts to forecast large downward price adjustments.
"As we have stated consistently since the current market downturn began late in the second quarter of 2012, this is a normal cyclical correction which brings fewer home sales and softer prices. Those hoping their predictions of a bursting bubble and cataclysmic drops in home values will come true are out of luck again," said Phil Soper, president and chief executive of Royal LePage. "Price appreciation in most markets across the country has been well below the long-term average for Canada and will remain so through to the end of the year. We expect to see the number of homes trading hands to begin to rise slightly on a year-over-year basis in the second half of 2013, with price softness continuing until mid-2014, at which point we'll see an emergence from the current cycle."
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 website at www.royallepage.ca. Current figures will be updated following the complete tabulation of the data for the second quarter of 2013. A printable version of the second quarter 2013 survey will be available online on August 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 14,500 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 and 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
For further information:
Kaiser Lachance Communications
Director, Global Communications & Public Relations
Royal LePage Real Estate Services