House Prices Approaching Pre-Recessionary Levels
According to a newly released survey from Royal LePage, home prices in Canada have continued their ascent towards pre-recessionary levels.
The move upwards is modest- but sustainable- a good sign that the market, in general, may be returning to reasonable, balanced levels. The average price of a home in Canada increased between 3.5 and 4.3% in Q1 of 2011.
Partly credited to continued low interest rates, and momentum generally from a recovering Canadian economy, home prices have continued to rise for the most part across the country, year-over year. According to the survey, “In the first quarter of 2011, the national average price of a detached bungalow rose 4.3 per cent year-over-year to $341,355, while standard two-storey homes rose 3.5 per cent to $379,388 and standard condominiums rose 4 per cent to $237,919.”
Home to the most significant price gains were Vancouver, Montreal and Halifax, thanks to demographic shifts regionally, and robust local economies.
“The rate at which Canadian homes are appreciating may well have peaked for the next year or so,” said Phil Soper, president and chief executive of Royal LePage Real Estate Services. “We expect house prices will continue to creep up, but most of the excess demand created by the initial drop in interest rates has been satisfied, and affordability continues to erode slowly, allowing the listings supply to catch up. In most markets, lower single digit percentage increases are more likely for the balance of the year.”
Despite a general upward trend in price, nationally, there were regional pockets that saw drops in price, notably in St. John’s, where the market is coming back down after months of significant price increases; Saint John N.B. registered a drop of 6.3% for detached bungalows; Calgary’s home prices are beginning to come back to earth after a feverish run up; average home prices there fell by 2.1% in the last year.
“Canada’s real estate market has maintained momentum coming out of 2010, indicating that the post-recession recovery is continuing,” Soper added. “While low interest rates continue to drive demand, the tepid pace at which employment levels are improving is tempering the rate of home price appreciation in many Canadian cities. The exception to this trend can be seen in markets like Vancouver, where foreign buyers, particularly from China, are driving demand in select mid-to-high priced markets, and driving up the regional average reported home prices at a surprising pace. In Montreal and Halifax, demand from first-time buyers and purchasers of luxury homes are creating significant year-over-year gains in home values.”
Speaking exclusively to Propertywire.ca, Michael McCann, Toronto Royal LePage Realtor, agrees with this characterization of the market, and sees it reflected locally, “There is not as much inventory. It has definitely moved into what we call balanced market territory. There are still individual neighbourhoods that will get lots of traffic and multiple offers- but that is happening less often.”
“People are looking for specific properties to suit their needs. Also, people who are looking are much more aware of other costs affecting their households, like the rising prices of gas and food.”