Natural Slowing of Home Price Appreciation Delayed in Ontario, Accelerated in the West

Steep oil price declines expected to impact key markets

TORONTO, Jan. 14, 2015 /CNW/ - Across the country, average home prices showed modest to healthy year-over-year gains in most markets in the fourth quarter of 2014, according to the Royal LePage House Price Survey and Market Survey Forecast released today. 

During the quarter, the average price of a home in Canada increased between 4.5 per cent and 6.7 per cent year-over-year. Nationally, the average price of detached bungalows rose 6.7 per cent $406,218, while standard two-storey homes increased 6.0 per cent to $443,379, and standard condominiums saw a 4.5 per cent increase to $257,624.  Against the backdrop of a decidedly mixed macroeconomic environment at home and abroad, Royal LePage expects home prices to increase moderately in 2015, forecasting a 2.9 per cent national increase for the year ahead.

"In the fourth quarter of 2014, real estate markets unfolded as we anticipated, with modest year-over-year price changes in most regions contrasted against continued steep price increases in Western Canada and Greater Toronto," said Phil Soper, president and chief executive of Royal LePage.  "This follows a similar trend observed in the third quarter of 2014, when we predicted the beginning of a cyclical slowing in home price appreciation, to a pace that better reflects broad economic factors."

"For our 2015 forecast, we could not ignore the potential impact of the steep decline in the price of oil on housing markets across Canada," continued Soper.  "In the immediate term we anticipate that the natural slowing of home price appreciation we called for in the third quarter of 2014 will be delayed in Central Canada and accelerated in the West by recent developments in the energy sector."

For the first half of 2015, Royal LePage expects a confluence of factors and the lower cost of oil to support continued positive price momentum in the Greater Toronto Area (GTA), which should experience the highest major market price increases.  Ontario's strengthened export economy buttressed by a flourishing U.S. economy and lower Canadian dollar; improved labour market trends; and unsatisfied demand from countless homebuyers who lost out in 2014 GTA bidding wars are expected to carry the all-important 2015 spring market.  Meanwhile in Atlantic Canada, buyers should continue to have the upper hand, with home prices across the region forecast to rise below general inflation.

"In contrast to many parts of Central Canada, we expect increased opportunity for homebuyers in Western Canada, but that opening is unlikely to last.  Over the longer term, we foresee a return to regional home price appreciation that is above both the historical average and national trends in general, when energy markets recover," added Soper.  "In the interim, slowed growth in the price of homes will be a welcome sign for many people in the West, especially in pricy markets like Vancouver where first-time buyers have been frustrated by a hyper-competitive market and home prices that have escalated at a feverish pace."

Royal LePage notes that potential threats to the health of the Canadian housing market remain, including sharp increases in interest rates, further federal government intervention in the mortgage market or a serious stumble on America's road to full economic recovery, but these are all considered unlikely in 2015.

"Ultimately the biggest threat to the Canadian housing market is a decline in consumer confidence, which could result from worsened employment prospects or decreased purchasing power, be it real or perceived.  In this light, we will be watching market developments closely in the regions most negatively impacted by oil price declines, such as Alberta, Saskatchewan and Newfoundland," concluded Soper.

Regional Market Summaries

A continuing inventory surplus has seen a steady market continue in Halifax with housing prices remaining relatively flat in the fourth quarter.  The average price of a standard condominium increased by 2.8 per cent year-over-year to $220,500 while standard two-storey homes increased by 1.2 per cent to $333,500. Detached bungalows decreased slightly, dropping by 0.8 per cent to $297,633.

St. John's experienced contrasting results to the rest of Atlantic Canada as its market saw significant price surges across all housing types. Strong demand in the region saw the average price for standard two-storey homes and detached bungalows both jump 6.9 per cent year-over-year, rising to $428,000 and $316,333, respectively. Standard condominiums also appreciated in the fourth quarter, increasing 6.3 per cent to $335,133.  

Montreal saw a relatively flat market in the fourth quarter of 2014, with the average price of detached bungalows increasing 2.1 per cent year-over-year to $297,300. The price of standard condominiums rose slightly with a 1.1 per cent increase to $241,983, while standard two-storey homes were essentially flat with an increase of 0.2 per cent to $402,321.

A healthy and confident Ottawa housing market saw moderate gains in spite of supply continuing to outstrip demand. Detached bungalows and standard two-storey homes increased 2.2 per cent year-over-year to $404,708 and 2.1 per cent to $407,440, respectively. Standard condominiums saw a slight decline in price, dropping 0.6 per cent to $258,817. 

Continuing low inventory and a complete lack of a winter slowdown saw significant increases across all major Toronto housing types. Detached bungalows rose 11.6 per cent to $647,535, while prices for standard two storey homes increased 8.6 per cent to $745,062.  Standard condominium prices saw an increase of 6.9 per cent year-over-year to $384,680.

The Winnipeg housing market saw relatively flat results continuing in the fourth quarter as inventory sat at a 10-year high. As a result standard two-storey homes saw a modest increase of 2.2 per cent year-over-year to $336,328. Meanwhile detached bungalows saw a slight increase of 0.1 per cent to $303,987 and standard condominiums saw a slight decrease of 0.2 per cent to $207,709.

The Regina housing market also witnessed a softening of prices this quarter. A supply imbalance pushed prices down with standard two-storey homes dropping 6.8 per cent year-over-year to $345,000 and detached bungalows dropping 6.5 per cent to $310,000. These declines were juxtaposed by a 5.4 per cent increase in the average price for standard condominiums, which rose to $223,500. 

The Calgary housing market continued to be among the strongest across the country.  Demand was strong for homes across all housing types, and continued to outstrip supply. Average prices for detached bungalows jumped 9.1 per cent year-over-year to $511,889 and standard two-storey homes increased 8.5 per cent to $500,320. Standard condominiums also experienced robust growth, rising 9.1 per cent to $311,644.

A competitive landscape and short supply of inventory resulted in continued appreciation of Edmonton housing prices. Strong economic growth in the city saw detached bungalows increase 8.3 per cent year-over-year to an average price of $373,244 and standard two-storey homes surge 9.4 per cent to $397,045. Standard condominiums also saw a sizable increase, rising 12.2 per cent year-over-year to $250,953.

The continued short supply of single family homes became the focus of intense demand from Vancouver buyers in the fourth quarter of 2014. The rare nature of these housing types saw the average price for detached bungalows increase 7.5 per cent year-over-year to $1,124,642 and standard two-storey homes increase 7.1 per cent to $1,233,182, while condominiums rose 3.8 per cent to $511,150.

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	Q4 2014 Average	Last Quarter Avg	Q4 2013 Average	Bungalow % Change	Q4 2014 Average	Last Quarter Avg	Q4 2013 Average	2 Storey % Change	Q4 2014 Average	Last Quarter Avg	Q4 2013 Average	Condo % Change
Halifax	297,633	294,333	300,000	-0.8%	333,500	331,833	329,633	1.2%	220,500	217,500	214,500	2.8%
Charlottetown	174,000	173,000	173,000	0.6%	205,000	205,000	205,000	0.0%	128,000	128,000	128,000	0.0%
Fredericton	202,000	202,000	203,000	-0.5%	210,000	215,000	215,000	-2.3%	147,000	145,000	151,000	-2.6%
Moncton	150,796	150,911	155,200	-2.8%	151,622	155,157	141,000	7.5%
St. John's	316,333	313,500	296,000	6.9%	428,000	424,167	400,333	6.9%	335,133	331,500	315,333	6.3%
Montreal	297,300	296,857	291,050	2.1%	402,321	403,714	401,714	0.2%	241,983	241,000	239,322	1.1%
Ottawa	404,708	403,091	396,000	2.2%	407,440	406,264	399,000	2.1%	258,817	258,132	260,500	-0.6%
Toronto	647,535	620,707	580,151	11.6%	745,062	731,348	686,250	8.6%	384,680	382,849	359,693	6.9%
Hamilton	248,667	244,409	234,241	6.2%	325,554	324,874	302,998	7.4%
Winnipeg	303,987	308,706	303,760	0.1%	336,328	341,863	329,104	2.2%	207,709	208,510	208,119	-0.2%
Regina	310,000	307,250	331,500	-6.5%	345,000	346,450	370,250	-6.8%	223,500	223,850	212,000	5.4%
Saskatoon	359,000	368,750	367,250	-2.2%	401,750	408,250	379,250	5.9%	275,333	257,000	264,667	4.0%
Calgary	511,889	515,844	469,078	9.1%	500,320	499,811	461,089	8.5%	311,644	294,156	285,689	9.1%
Edmonton	373,244	368,720	344,583	8.3%	397,045	391,726	362,770	9.4%	250,953	245,624	223,578	12.2%
Vancouver	1,124,642	1,135,009	1,046,300	7.5%	1,233,182	1,220,909	1,151,550	7.1%	511,150	502,869	492,500	3.8%
Victoria	470,580	468,000	460,000	2.3%	474,575	477,000	463,000	2.5%	258,213	270,000	249,000	3.7%
National	406,218	405,101	380,710	6.7%	443,379	441,714	418,282	6.0%	257,624	257,377	246,530	4.5%

2015 Royal LePage Market Survey Forecast

Average House Price % Change
Market	Province	2015/2014 % Change	2015 Forecast	2014	2013
Halifax	NS	0.5%	277,000	275,500	274,880
Montreal	QC	0.6%	331,000	329,000	320,490
Ottawa	ON	1.8%	370,000	363,600	358,876
Toronto	ON	4.5%	592,000	566,500	524,089
Winnipeg	MB	0.4%	275,000	274,000	268,382
Regina	SK	-1.3%	311,000	315,000	312,355
Calgary	AB	2.4%	472,000	461,000	437,036
Edmonton	AB	2.5%	371,000	362,000	344,977
Vancouver	BC	2.8%	835,000	812,000	767,765
National		2.9%	419,318	407,500	382,466

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 fourth quarter of 2014. A printable version of the fourth quarter 2014 survey will be available online on February 9, 2015. 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 over 16,000 real estate professionals in more than 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 Limited

Ray McIlroy, Kaiser Lachance Communications, O: 647-725-2520 x215, C: 647-680-8316, [email protected]

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