"The first quarter of 2010 continued where 2009 left off, with more Canadians enthusiastically participating in a rejuvenated residential real estate market," said Phil Soper, president and chief executive, Royal LePage Real Estate Services. "One of the earliest sectors of the economy to return to growth after the difficult recessionary period, the housing sector has been a prime beneficiary of low borrowing costs and improving consumer confidence."
House prices were up across all key housing types surveyed by Royal LePage, with the average price of a detached bungalow in Canada rising 11 per cent to $329,209 in the first quarter year-over-year, while standard two-storey homes rose 10.3 per cent to $365,141 and standard condominiums increased 10.9 per cent to $228,963.
While some analysts have described house price increases over the past 12 months as a national housing boom, an analysis of Royal LePage data from Q1 2008 through Q1 2010 shows three different patterns of house price trends in Canada's major cities:
- a rollercoaster effect in which prices dropped sharply then rose
dramatically to levels that exceed pre-recessionary prices (Toronto,
Vancouver and Victoria);
- non-stop growth markets, which were generally resilient through the
downturn with incremental price appreciation over a two-year period
(Halifax, Ottawa, Regina, Saint John, St. John's and Winnipeg); and,
- level markets, where house prices have remained relatively unchanged
(Calgary, Edmonton, Moncton and Montreal).
"National averages from our first quarter report are not particularly useful in painting a picture of the country's neighbourhood real estate stories. House sale data from the past two year period shows tremendous variances in terms of how different cities reacted to the recession," Soper said. "In Vancouver and Toronto, for instance, the dramatic unit sales fluctuations exhibit a significant degree of market irrationality: inordinately fearful when faced with poorer markets; and overly enthusiastic when the tables turned. Montreal is an example of a city where the market has been much more stable and homeowners there seem quite happy with the relatively slow pace of change."
"Even in our most frenzied pockets of market activity, the inevitable rise in interest rates coupled with home price appreciation will rein in demand as affordability erodes. Expect house prices to continue to rise, but the rate of appreciation should ebb steadily, month by month, throughout the remainder of the year, as balance returns to the industry," concluded Soper.
To view regional data chart please visit: http://files.newswire.ca/29/rlpENG.pdf
In addition to strong price appreciation in the first quarter of 2010, the volume of sales also increased year-over-year as pent-up demand from constrained supply of homes for sale in 2009, coupled with unseasonably warm weather, prompted a spike in home sales in the country's largest housing markets from January through March.
In Montreal, where average prices increased between 7.2 and 7.6 per cent year-over-year, a standard two-storey home was $355,109 in the first quarter of 2010. The real estate market has been extremely active on the Island of Montreal. Low inventory, combined with the presence of first time buyers and consumers' desire to beat the expected interest rates hikes have contributed to an increase in average house prices for the first quarter of 2010.