Canada emerges from "the housing market correction no one noticed"

Royal LePage records strong house price gains in the third quarter of 2013

TORONTO, Oct. 10, 2013 /CNW/ - According to the Royal LePage House Price Survey released today, the average price of a home in Canada increased between 1.2 per cent and 4.1 per cent in the third quarter of 2013.

The survey showed a year-over-year average price increase of 3.7 per cent to $418,686 for standard two-storey homes, while detached bungalows rose 4.1 per cent to $381,811. During the same period, the average price for standard condominiums saw a more moderate increase, rising 1.2 per cent to $246,530. Sales volumes surged in a number of regions, as Canadians re-entered the housing market after sitting on the sidelines for more than a year - marking the end of the most significant housing market correction  since the 2008-2009 global recession.

"Canada experienced a significant housing market correction over the last four quarters that most in the nation missed entirely," said Phil Soper, president and chief executive of Royal LePage.  "Many regions experienced dramatic slowdowns in the number of homes trading hands, but news of double-digit unit sales declines went largely unnoticed, over-shadowed by a macabre fascination with the prospect of a U.S.-style home price collapse, which of course never transpired. Our over-heated real estate market of 2011 and early 2012 drove some to the sidelines. Home price appreciation ground to a halt for a year - a necessary breather and predictable market response."

According to the Royal LePage survey, St. John's, Toronto, Winnipeg, Saskatoon and Calgary led the country in home price increases, while Vancouver posted year-over-year price gains across all three housing categories.

"Our housing market turned a corner in the third quarter. Buyers returned to the streets in droves, resulting in a sharp increase in home sales.  In many cities, there simply weren't enough properties on the market to satisfy demand, which put upward pressure on prices for the first time in 2013," continued Soper. "We expect this positive momentum to continue through the all-important spring market of 2014, buoyed by a combination of pent-up demand, increasing consumer confidence and continued low interest rates."

Last month, a number of prominent financial institutions upgraded their projections on Canada's future gross domestic product (GDP) growth. TD Bank raised its outlook for Canadian GDP growth for the third quarter to an annual rate of 2.3 per cent, while maintaining its forecast that full-year growth will be 1.7 per cent in 2013 and 2.4 per cent in 2014. RBC posted slightly higher GDP growth numbers for this year and next of 1.8 and 2.8 per cent, respectively. In the same month Statistics Canada reported that Canada's economy created 59,000 jobs in August, approximately triple what most economists had forecast.

"Job growth begets consumer confidence. An emboldened citizen is more likely to enter into a major financial transaction. Following almost six years of turbulent times, economic fundamentals are pointing to an era of renewed  prosperity. The American economy is on an upward trajectory and businesses in Canada and around the world are finally loosening purse strings and investing in people for growth. This is vitally important for an exporting nation like ours. And as goes the Canadian economy, so goes the residential real estate sector," explained Soper.

"Emerging headwinds for Canada's real estate market include the demographic trend of simply having fewer people of home-buying age than in the 2000s, but this will be offset by immigration and social change.  Baby Boomers are living longer than their parents, extending that generations period of active real estate participation.   At the other end of the scale, single people, and in particular single women, are buying homes earlier and at a faster rate than ever before."

Soper concluded, "while interest rates must of course rise from current historical lows, we anticipate the change to be modest in the medium term. As the country emerges from this extended correctional cycle, we believe the real estate market stimulus previously provided by low interest rates will be replaced by a strengthening labour market and true economic recovery."

Regional Market Summaries

In Halifax, standard two-storey homes and standard condominiums each posted strong year-over-year price gains of 5.9 per cent, landing at $329,333 and $214,000 respectively. Detached bungalow prices saw a more modest gain of 2.0 per cent to $299,000.

Strong activity in all housing types has led to significant price appreciation in the St. John's housing market.  Standard two-storey home, detached bungalow and standard condominium prices each posted substantial gains of 12.1 per cent year-over-year, landing at $400,333, $296,000, and $315,333 respectively.

After a slow start to 2013, house prices started to stabilize this quarter in the Montreal market. Consumer preference for two-storey homes kept demand lower for detached bungalows, resulting in a very modest 0.6 per cent year-over-year increase to $289,306.  Standard two-storey homes witnessed the greatest increase, rising 3.9 per cent to $403,007, while still higher than usual inventory kept standard condominiums to a more moderate 1.2 per cent increase, landing at $239,819.

Mixed results characterized the Ottawa housing market this quarter, with a strong demand for higher-end housing driving prices in detached homes, while increased inventory drove slight price declines in the condominium market. Standard two-storey homes showed steady year-over-year price growth, increasing 2.4 per cent year-over-year to $401,500 while detached bungalows posted a 2.3 per cent increase to $398,417. Standard condominium prices declined by 1.1 per cent to $259,000.

Pent-up demand from a slower start to spring contributed to increased activity in the Toronto housing market over the summer. Detached bungalows and standard two-storey homes both saw healthy year-over-year price appreciation in the third quarter, rising 5.0 per cent to $577,563 and 4.1 per cent to $678,016, respectively. Standard condominiums were essentially flat compared to last year, inching up 0.3 per cent to an average price of $355,483.

A later than usual start to the market this year led to pent-up demand and price increases in Winnipeg in the third quarter.  Standard two-storey homes saw a significant price increase of 8.6 per cent year-over-year to $346,765, while detached bungalows increased 4.2 per cent to $307,069. During the same period, the average price for a standard condominium increased 3.5 per cent to $195,226.

Prices continue to rise, but are beginning to level off in the Regina house market.  Standard two-storey home prices saw the greatest gains, rising 3.5 per cent year-over-year to $372,250. Detached bungalows remained relatively flat, edging up by 0.4 per cent to $336,500, and standard condominium prices also rose slightly, by 0.9 per cent to $212,622.

A sustained period of low housing inventory coupled with a healthy economy and an influx of corporate sector workers has fuelled strong price growth in Calgary.  Average home prices in the city were buoyant in the third quarter with detached bungalows increasing 7.2 per cent year-over-year to $465,411, standard condominiums increasing 5.6 per cent to $263,087 and standard two-storey homes increasing 3.4 per cent to $446,411.

Slowing activity in the Edmonton market has held average housing prices relatively flat. Standard two-storey homes witnessed a year-over-year increase of 1.5 per cent to $362,000, while standard condominiums edged up 0.5 per cent to $203,637. Prices for detached bungalows increased slightly over the same period, rising 0.7 per cent to $337,804.

A resurgence in market activity across all housing types has led to strong price appreciation in the Vancouver market.  Detached bungalows saw a sizeable increase of 5.6 per cent year-over-year to $1,070,000 and standard two-storey homes rose 2.7 per cent to $1,156,500. Standard condominiums were also up, increasing 1.2 per cent to $503,750.

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	Q3 2013 Average	Last Quarter Avg	Q3 2012 Average	Bungalow % Change	Q3 2013 Average	Last Quarter Avg	Q3 2012 Average	TwoStorey % Change	Q3 2013 Average	Last Quarter Avg	Q3 2012 Average	Condo % Change
Halifax	299,000	288,667	293,000	2.0%	329,333	333,167	311,000	5.9%	214,000	215,950	202,000	5.9%
Charlottetown	173,000	173,000	172,000	0.6%	205,000	205,000	205,000	0.0%	128,000	128,000	127,000	0.8%
Moncton	148,000	153,000	147,900	0.1%	145,000	143,300	134,600	7.7%
Fredericton	207,000	207,000	205,000	1.0%	215,000	220,000	220,000	-2.3%	153,000	158,000	158,000	-3.2%
Saint John	176,092	177,828	186,034	-5.3%	278,895	279,922	272,591	2.3%	156,905	158,068	158,225	-0.8%
St. John's	296,000	290,000	264,167	12.1%	400,333	392,667	357,000	12.1%	315,333	309,333	281,333	12.1%
Montreal	289,306	288,868	287,500	0.6%	403,007	397,643	387,786	3.9%	239,819	240,306	236,989	1.2%
Ottawa	398,417	396,483	389,583	2.3%	401,500	398,983	392,167	2.4%	259,000	259,417	261,833	-1.1%
Toronto	577,563	572,263	550,025	5.0%	678,016	676,087	651,594	4.1%	355,483	361,842	354,567	0.3%
Hamilton	228, 901	222,761	214,796	6.6%	294,919	294,928	289,634	1.8%
Winnipeg	307,069	305,010	294,625	4.2%	346,765	344,598	319,250	8.6%	195,226	198,431	188,714	3.5%
Regina	336,500	330,000	335,000	0.4%	372,250	363,000	359,500	3.5%	212,622	205,500	210,750	0.9%
Saskatoon	366,250	369,250	348,000	5.2%	399,750	394,250	373,500	7.0%	255,000	255,000	252,333	1.1%
Calgary	465,411	457,889	434,267	7.2%	446,411	453,789	431,544	3.4%	263,087	261,933	249,167	5.6%
Edmonton	337,804	347,344	335,429	0.7%	362,000	361,636	356,714	1.5%	203,637	204,755	202,714	0.5%
Vancouver	1,070,000	1,052,500	1,013,500	5.6%	1,156,500	1,151,250	1,125,750	2.7%	503,750	490,475	498,000	1.2%
Victoria	458,000	453,100	450,000	1.8%	462,000	461,000	455,000	1.5%	268,000	267,400	275,000	-2.5%
National	381,811	386,547	366,773	4.1%	418,686	419,614	403,747	3.7%	246,530	248,750	243,607	1.2%

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 November 7, 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

Gwen McGuire
Kaiser Lachance Communications
647-725-2520
[email protected]

Tammy Gilmer
Director, Global Communications & Public Relations
Royal LePage Real Estate Services
416-510-5783
[email protected]