Canada's resale housing market finished the second quarter on strong and steady footing; surprising many by its astounding momentum. Healthy and robust conditions are expected to prevail through to year's end as all regions are poised to experience a rise in average house prices, with double-digit gains forecast for Edmonton, Calgary, Winnipeg and Regina, according to a report released today by Royal LePage Real Estate Services.
Echoing the growth and activity experienced in all Canadian markets in the first half of the year, the national average house price is forecast to rise by 9.5 per cent, passing the $300,000 mark for the first time, to $303,300. Home sale transactions are projected to rise by 8 per cent to 522,306 unit sales by the end of 2007.
“The momentum from the year's extraordinary start spilled into the second quarter, compounding typically busy spring market activity and stimulating solid price appreciations in almost all regions of the country. These conditions will certainly be an impetus characterizing Canada's real estate market through to year's end,” said Phil Soper, president and chief executive officer, Royal LePage Real Estate Services. “As we move into the second half of the year, we continue to expect areas of aggressive price appreciation in the west, and modest, mid-single digit price increases in Central and Atlantic Canada.”
Added Soper: “The most profound story in Canadian real estate today is the extraordinary interest that people across our country continue to have in buying and selling homes. The sheer number of homes trading hands this year has far exceeded consensus expectation. This market continues to show strength as we move into the second half of the year.”
New to the stage of regional players exhibiting extreme home sales activity and searing house price increases is Saskatchewan. Record numbers of homes sold in both Regina and Saskatoon in the second quarter as intense demand was driven by a swell of in-migration of Saskatchewanians returning from expensive Alberta living. These frenetic conditions are expected to continue, albeit at a slightly more temperate pace.
Energy rich Alberta's potent economy continued to attract in-migration; however, the runaway prices and activity that have characterized Calgary and Edmonton for the past eighteen months have started to ease and will continue to return to more manageable conditions as the year presses onwards. Most notable during the second quarter was the change in Calgary's inventory levels, which increased substantially as some sellers decided to cash in on their home equity. This increased supply, combined with the natural dampening effect that high prices have on demand, is leading to more balanced conditions and a stabilizing of average price appreciations.
Looking ahead, Central Canada should continue to enjoy balanced market conditions. More modest increases can be expected as we move into the traditionally slower second half of the year. The combination of healthy regional economies and job markets, population growth and the recognition that real estate is a sound investment, will continue to attract buyers and bolster demand for housing.
In Toronto, an unseasonable spike in activity may occur in the fall as some buyers react to the city-proposed increase in land transfer taxes for the area, jumping into the market before the proposed taxes are to go into effect.
Anticipated growth of the oil sector in St. John's, Saint John and Fredericton is expected to create an abundance of jobs in Atlantic Canada and maintain the buoyancy of the eastern market, compensating for the significant loss of trades people who have flocked to Alberta.
“During the first half of the year, strong economic fundamentals fuelled consumer confidence and reasonable affordability drove housing demand across the country. In most provinces, inventory levels were up slightly year-over-year, helping to balance the national market, ” commented Soper.
Of the housing types surveyed, the highest average price appreciation occurred in detached bungalows, which rose by 15.4 per cent to $338,738, followed by standard two-storey properties, which rose to $399,469 (13.2%), and standard condominiums, which increased to $238,784 (15.1%), year-over-year.
Regional Market Summaries
The housing market in Halifax maintained its strength during the second quarter and is expected to remain healthy through the remainder of the year. First-time buyers drove much of the quarter's market activity, with properties priced under $300,000 in greatest demand.
The housing market in Moncton experienced strong sales activity during the second quarter, while a decrease in listings helped push the market in the seller's favour. Affordability remains good in Moncton as the city offers the most affordable real estate in the province. The market is expected to remain strong for the rest of the year with prices increasing slightly and sales activity continuing to flourish.
Saint John's robust economy and high consumer confidence helped fuel real estate activity prompting average price increases during the second quarter. Saint John is gradually becoming the energy hub of the east coast as a new oil refinery has been built and projects, such as the refitting of the nuclear generating plant are slated for the near future.
In Charlottetown, the housing market experienced a strong start to the second quarter and began to moderate towards the quarter's end, resulting in modest average price increases. Contributing to the slight decrease in activity during the quarter was the provincial election, which resulted in a new government. The three year freeze on assessments that the new government is imposing should also help the market conditions.
Activity in St. John's remained stable and average house prices increased during the second quarter, as the city began to experience a shortage in inventory. A strong economy and high consumer confidence were supported by the recent excitement that the long awaited local oil project Hebron Ben Nevis is on again. Affordability is good and there is nothing to indicate anything but a healthy market going forward.
Pressuring prices upwards and maintaining buoyancy in the market, the strong buyer demand in Montreal led the city to experience a stronger than expected second quarter. With inventory levels slightly elevated from this period last year, the market shifted to more balanced conditions from the seller's conditions, which typified the market over the past few years. Westmount remains a popular neighbourhood among young professionals and baby boomers who are drawn to the cache of the established area. Due to various sound fundamental underpinnings, Montreal is poised to enjoy a healthy housing market through to year's end. High consumer confidence, robust demand and a healthy economy will continue to help fuel demand and keep the market moving at a strong pace.
Toronto's resale housing market experienced a strong second quarter, characterized by record-breaking activity and rising average house prices. Toronto's better than expected second quarter was defined by intense demand that was only barely met by inventory levels. Multiple offer situations occurred frequently on detached homes, resulting in decreased average listing periods from this time last year. Looking ahead to the end of the year, the housing market is expected to continue to enjoy strong, yet slightly slower activity, accompanied by modest rates of price appreciation.
Ottawa maintained the title of Canada's most stable housing market due to unwavering demand being met by a comparable level of inventory, resulting in moderate average house appreciations. All purchaser groups were very active during the second quarter, with many first-time homebuyers taking advantage of relatively modest interest rates. Ottawa's housing market is poised to perform as it has been throughout the second quarter: strong and steady, with average house prices rising moderately, while the market remains balanced.
Winnipeg's housing market sizzled through the second quarter, and will continue to do so for the remainder of the year. The recent Manitoba election prompted increased government spending, particularly on infrastructure, which has led to the creation of a strong job market and the rejuvenation of several neighbourhoods, attracting an increase in buyers. The condominium market remains a bright spot in Winnipeg as many first-time buyers and baby boomers flock to the maintenance-free lifestyle this housing type offers. Despite new condominiums coming on stream in 2007, fierce demand will hold a tight grip on inventory levels.
Regina experienced a booming housing market, supported by the city's extraordinary job market and diversified economy. Recent proactive media campaigns in the western provinces promoting Regina as a great place to live attracted many buyers to the city. New to Regina's housing landscape is the rapid growth in the condominium market, which have become the favoured choice of first-time buyers entering the market.
With the same fundamental conditions in tact as in Regina, market activity in Saskatoon was frenetic during the second quarter; with even more significant price appreciations recorded. Very limited supply, coupled with fierce demand, drove prices up in all housing categories, with huge appreciations in the condominium sector. The brisk activity and rising prices have also had a ripple effect into neighbouring areas. The typically slower market in Swift Currant has been invigorated by a spill over of buyers from Saskatoon. Despite the rapid spike in average house prices, market activity began to stabilize at the end of the second quarter and is expected to continue at a slightly more temperate pace, yet still very strong, for the remainder of the year.
In Calgary, sellers cashing in on home equity gains caused housing inventory to rise, which led to more moderate price appreciations compared to the steep appreciations and frenzied activity that occurred last year. Multiple offer situations still occurred during the second quarter, but with less frequency than in the past few months. Listing periods increased slightly over last year with houses remaining on the market 35 per cent longer. While Calgary's market is expected to remain strong and healthy throughout 2007, the city is not expecting to experience the conditions that characterized the market for much of 2006.
Edmonton's housing market enjoyed a robust second quarter with significant double-digit price appreciations For the majority of the second quarter Edmonton experienced strong demand that outpaced supply, resulting in an abundance of multiple offer situations. The condominium sector experienced tremendous gains during the second quarter as a number of new projects came on stream pressuring prices upwards; most notably, in Riverbend/Terwilliger the price of a standard condominium reported average house price increases of 100 per cent. While house prices are forecast to stabilize during the next two quarters, the housing market is poised to remain healthy and strong for the remainder of the year.
Vancouver experienced a traditionally strong spring market achieving record sales due to a steady increase in demand. The condominium sector experienced busy activity during the second quarter as buyers increasingly favoured the low-maintenance lifestyle that condominiums offer; however, supply could not satisfy demand. Construction of new condominium projects is limited as the city is approaching a build out, and reaching full building capacity within the downtown peninsula, placing a cap on future inventory. Strong consumer confidence, buoyed by economic prosperity in Vancouver is expected to stimulate strong housing market activity for the remainder of the year.
Victoria's housing market experienced a rise in average house prices during the second quarter, due to the combination of a hot job market, high consumer confidence and low inflation. Steady buyer demand was evident in all housing types; however, condominiums received the most notable attention. Although there has been an increase in inventory in the second quarter, multiple offer situations continue to characterize Victoria's market, with listing periods lasting an average of 30 days.
Survey of Canadian House Prices Second Quarter 2007 Average House Prices
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| Standard Detached Bungalow | Standard 2-Storey | Standard Condominium | ||||||
| Market | Q2 2007 Average | Q2 2006 Average | % Change | Q2 2007 Average | Q2 2006 Average | % Change | Q2 2007 Average | Q2 2006 Average | % Change |
| Halifax | 197,667 | 182,000 | 8.6% | 227,000 | 198,333 | 14.5% | 145,000 | 138,500 | 4.7% |
| Charlottetown | 147,000 | 145,000 | 1.4% | 180,000 | 175,000 | 2.9% | 100,000 | 98,000 | 2.0% |
| Moncton | 142,000 | 133,000 | 6.8% | 142,000 | 133,000 | 6.8% | - | - |
|
| Fredericton | 155,000 | 155,000 | 0.0% | 190,000 | 193,000 | -1.6% | 130,000 | 125,000 | 4.0% |
| St. John's | 147,000 | 143,667 | 2.3% | 206,667 | 206,000 | 0.3% | 153,333 | 149,333 | 2.7% |
| Atlantic | 157,733 | 151,733 | 4.0% | 189,133 | 181,067 | 4.5% | 105,667 | 102,167 | 3.4% |
| Montreal | 223,864 | 211,160 | 6.0% | 333,652 | 319,134 | 4.5% | 201,694 | 191,308 | 5.4% |
| Ottawa | 303,083 | 285,917 | 6.0% | 299,667 | 281,833 | 6.3% | 191,667 | 178,167 | 7.6% |
| Toronto | 398,647 | 376,223 | 6.0% | 517,659 | 474,766 | 9.0% | 274,262 | 256,178 | 7.1% |
| Winnipeg | 207,750 | 185,700 | 11.9% | 227,613 | 201,625 | 12.9% | 117,260 | 107,065 | 9.5% |
| Regina | 204,000 | 143,250 | 42.4% | 181,917 | 152,925 | 19.0% | 118,300 | 94,500 | 25.2% |
| Saskatoon | 281,250 | 180,250 | 56.0% | 305,000 | 196,500 | 55.2% | 205,000 | 111,000 | 84.7% |
| Calgary | 459,889 | 371,200 | 23.9% | 465,678 | 397,867 | 17.0% | 300,078 | 235,567 | 27.4% |
| Edmonton | 374,143 | 253,857 | 47.4% | 397,857 | 281,286 | 41.4% | 263,333 | 175,833 | 49.8% |
| Vancouver | 787,750 | 708,000 | 11.3% | 875,750 | 792,375 | 10.5% | 419,250 | 369,000 | 13.6% |
| Victoria | 382,000 | 368,000 | 3.8% | 414,000 | 402,000 | 3.0% | 260,000 | 229,000 | 13.5% |
| National | 338,738 | 293,618 | 15.4% | 399,469 | 352,776 | 13.2% | 238,784 | 207,431 | 15.1% |
The Royal LePage Survey of Canadian House Prices 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 80 communities across the country. A complete database of past and present surveys is available on the Royal LePage Web site at www.royallepage.ca, and current figures will be updated following the end of the second quarter. A printable version of the second quarter 2007 survey will be available online on August 15, 2007.
Housing values in the Royal LePage 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. Historical data is available for some areas back to the early 1970s.
About Royal LePage
Royal LePage is Canada's leading provider of franchise services to residential real estate brokerages, with a network of over 12,600 agents and sales representatives in 600 locations across Canada operating under the Royal LePage, Johnston and Daniel, and Realty World brand names. Royal LePage manages the Royal LePage Franchise Services Fund, a TSX listed income trust, trading under the symbol “RSF.UN”. For more Information visit www.royallepage.ca .