Foreign investment slowed in fourth quarter but continues to add to demand for Vancouver homes; average prices expected to climb a more modest 2.3 per cent in 2012
VANCOUVER, Jan. 12, 2012 /CNW/ - The Royal LePage House Price Survey and Market Survey Forecast released today showed strong year-over-year price appreciation for all housing types surveyed in Vancouver.
Detached bungalows posted the largest year-over-year price increases, rising 14.1 per cent to $1,017,500. Standard two-storey homes rose 10.9 per cent year-over-year to $1,117,250, while standard condominiums climbed 10.7 per cent year-over-year to $536,500.
"Investment from Asia continued to add to demand for real estate in Canada's most expensive market," said Bill Binnie, broker and owner of Royal LePage North Shore. "Though investment from Asia slowed slightly in the fourth quarter, these buyers continued to view Canadian real estate as a safe place to park their money."
In addition to foreign investment, Binnie noted that low interest rates drove demand for Vancouver homes as many buyers took advantage of low rates to enter the market or move-up to larger homes.
According to Binnie, inventory levels were in line with the fourth quarter of last year but unit sales, particularly for detached homes, were up over the same period.
Looking ahead to 2012, price appreciation in the Vancouver market is expected to slow with average prices predicted to finish the year 2.3 per cent higher than the end of 2011.
"The state of the global economy will be a major factor in determining how the Vancouver real estate market fares in 2012," said Binnie. "From interest rates to foreign investment, the international economic situation will go a long way in determining demand for Vancouver homes."
"While we anticipate some slowing of the market this year, we believe calls for a price correction - particularly in the condo market - are unfounded," he added. "We expect continued foreign investment and continued low rates to sustain demand for all housing types in 2012."
Nationally, despite calls in some quarters for Canadian house prices to soften in 2011, the market proved resilient as demand created by low interest rates and a relatively stable national economy created upward pricing pressure for all housing types surveyed. Further, recent high profile reports forecasting significant house price declines in 2012 are not supportable. In the fourth quarter, standard two-storey homes rose 4.2 per cent year-over-year to $375,427, while detached bungalows increased 6.1 per cent to $344,392. Average prices for standard condominiums increased 3.6 per cent to $234,680.
"In the recovery period following the 2008-2009 recession, I found myself repeatedly speaking of 'irrational exuberance' in the Canadian housing market," said Phil Soper, president and chief executive of Royal LePage Real Estate Services. "Expectations were too high and the pace of expansion unsustainable. With this report, I find myself in exactly the opposite position. Widespread calls for a major real estate correction in 2012 simply can't be justified. The industry has significant momentum entering the year, and is buoyed by the stimulative effect of very low interest rates; we expect the market to continue to expand - albeit at a slower pace."
Royal LePage expects average price growth to continue through 2012 and predicts national average prices to increase by 2.8 per cent by the end of the year.
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 2011. A printable version of the fourth quarter 2011 survey will be available online on February 10th, 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.
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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