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Economy Housing Market
Canada's housing market remains stable; moderate price increases in first quarter -
Strong local economies and population growth support buyer demand -
Ottawa's harsh winter led to a deceleration of housing market activity
TORONTO - Canada's real estate market stands on stable footing. On average, healthy year-over-year house price gains were recorded during the first three months of 2008. While more modest price increases were observed when compared to previous quarters, the solid appreciations noted in the first quarter are largely due to the shared effects of resilient local economies, high immigration levels, and relatively low interest rates - all leading to enduring buyer demand, according to a House Price Survey report released today by Royal LePage Real Estate Services.
While almost all markets surveyed experienced price increases, it was the
smaller cities, with relatively affordable housing and strong economies based
on resource industries that emerged with the most significant gains. Thriving
Saskatoon saw appreciation as high as 66 per cent, while areas in Newfoundland
posted increases above 20 per cent for the first time since Royal LePage
started tracking house prices.
Of the housing types surveyed, detached bungalows increased to $336,834
(+8.3 %), followed by standard two-storey properties, which rose to $400,647
(+7.1%), and standard condominiums, which increased in price to $240,423 (+6.9
%), year-over-year.
"Canada's housing market remains on solid footing. With the notable
exception of a handful of small western cities, the country has returned to an
environment characterized by moderate house price increases," said Phil Soper,
president and chief executive, Royal LePage Real Estate Services. "These
conditions are far more agreeable to those searching for a home, and are more
sustainable in the long term than the sharp price increases recently
experienced."
Although slowing global economies have moderated the demand for Canada's
natural resources, export regions continue to enjoy stronger local real estate
markets. Atlantic Canada is characterized by strong growth, as healthy
provincial economies and oil expansion projects lead to high in-migration
levels. In Saskatchewan, gold, diamond and uranium mining, along with
prospering agriculture industries, have retained many would-be out-migrates,
and the more moderate cost of living has also lured skilled workers from
Alberta. Winnipeg's growing population and robust economy is supported by the
farming industry and the rising prices of grain.
Strong demand and rising house prices were also noted in cities not
driven primarily by the natural resource sector.
Average house prices increased in Toronto and Montreal during the first
quarter, while unit sales activity dipped from the same period last year.
While there was a decline in unit sales volumes, the current activity levels
in both cities are amongst two of the best first quarters on record for
Toronto and Montreal.
It is worth noting that record snowfall in Central Canada and Quebec left
many city streets and sidewalks virtually inaccessible to potential homebuyers
during the first quarter. As a result, many sellers held off listing their
homes, choosing to wait for more conducive weather for open houses and
viewings.
Despite Alberta's strong economy and continued buyer demand, house prices
and market activity tempered from the frenetic pace that characterized the
energy-fuelled province in the past few years. As global oil prices continue
to fluctuate, some area buyers have grown weary of a housing market that is
closely tied to the oil and gas sector. As a result, listing inventory and
selling periods increased during the first quarter, while sales activity
continued to normalize.
Helping fuel Canada's housing market is its status as having the fastest
population growth amongst the G-7 countries. This is a stabilizing force
within the Canadian housing market and is critical for price appreciation in
the longer term. Canada continues to attract a high number of skilled
immigrants; while immigrants have typically gravitated to larger cities such
as Vancouver, Montreal and Toronto, trends now illustrate that secondary
cities requiring skilled workers are regarded as home to many newcomers.
In addition to steady population growth, the structure of Canada's
financial services industry, and the lending products they provide, has
buffered the country from the credit issues that currently exist within the
U.S. housing market.
Added Soper: "We know now that the Canadian real estate market has
followed a markedly different path from that of the United States. Our tiny
subprime mortgage market has exposed us to very few of the pitfalls that have
created the unfortunate chaos south of the border. While Canada will not
escape the negative impact of a troubled American economy, Canadians' home
equity should remain safe, as the market moves into a period of slow growth,
but growth nonetheless."
REGIONAL SUMMARIES
After years spent supplying Western Canada's resource boom with
much-needed labour, Atlantic Canadians are once again looking east to purchase
property. In Halifax, housing prices increased in the first quarter, due in
part to efforts by the provincial government and local businesses to entice
younger residents to work and live in their native Nova Scotia. A slow trickle
of skilled workers returning home from stints on 'the patch' in Alberta
contributed to growing buyer demand and sustained market activity throughout
the winter.
In Moncton, buyer demand pressured prices upward and contributed to
overall balanced market conditions during the first three months of 2008. A
steady supply of homes at virtually all price points continued to attract
buyers into the city's housing market - one that is still considered to be
amongst the most affordable in Canada.
Prompted by the Intelligent Community Forum's recent recognition of
Fredericton as the world's seventh smartest city, and ongoing growth in the
public and technology sectors, year-over-year house prices continued to rise.
House price appreciation was buoyed by the city's strong sense of optimism
about the future and sustained interest in the first quarter from both buyers
and sellers.
Low unemployment and a strong provincial economy continued to bolster
house prices in Saint John in the first quarter of 2008. Like many parts of
Atlantic Canada, housing conditions in New Brunswick continue to benefit from
a returning labour force and the ensuing augmented housing demand,
particularly with properties in the $240,000 to $250,000 range. Regional
refiner Irving Oil, and global oil and gas giant BP's Eider Rock Refinery
Project continue to move forward and have given many residents reason to be
optimistic about the city's long-term future and growth.
Steady in-migration from Maritime Canadians returning to Charlottetown
after working out west continues to drive modest price appreciation for
two-storey and bungalow properties. Condominiums, a relatively new property
type in the area, continue to receive significant buyer interest from
first-time buyers and retirees looking to live maintenance-free along the
city's waterfront - a factor that has contributed to the area's sustained
growth and healthy housing market conditions.
In St.John's, the prospect of becoming a "have" province by 2009, as well
as the provincial government's announcement of an $881 million surplus
triggered a rise in average house prices during the first quarter. Further
expansion of Husky Oil's White Rose project and potential development of a
nickel deposit in Southern Head led to a rise in consumer confidence and
double-digit house price increases, as the shift towards a sellers market
continued throughout the city. Winter - typically a slower period for home
sales in St. John's - did little to decrease market activity in the first
quarter. A shortage of desirable property listings, immigration and new
listings lasting no more than two days on the market continue to characterize
a market that is building on momentum created in 2007.
Montreal experienced near double-digit gains in average house prices
during the first quarter of 2008, driven primarily by continued strong buyer
demand and the affordable cost of borrowing money. While the province's
manufacturing sector experienced a troubling first quarter, the robust service
sector has been able to offset the impact by absorbing a considerable amount
of those who would be without jobs. Montreal's economy remains relatively
strong, and has helped position the province to be among the least affected by
housing's decreasing affordability.
In much of Ontario, weather impacted the first quarter housing market.
Ottawa's harsh winter led to a deceleration of housing market activity;
however, average prices still experienced moderate increases. In years past,
first quarter showing conditions fared far better for area homeowners, who,
with less snow, were able to highlight desirable selling features. This year's
conditions, however, prevented many homeowners from staging open houses and
deterred some sellers from listing their properties altogether, as viewings
proved too much for many would-be buyers.
In Toronto, persistent buyer demand and limited inventory levels
continued to pressure prices upward in the first quarter; however, activity
levels were slightly down. Record snowfall in Toronto left many city streets
and sidewalks virtually inaccessible to potential homebuyers during the first
quarter. As a result, many sellers held off listing their homes, choosing to
wait for more conducive weather for open houses and viewings. While Toronto's
real estate market performed a little slower than expected during the first
quarter of 2008, it is likely to gain strength as it moves into the busy
spring season. Despite decreased overall activity, some of the city's
neighbourhoods still received significant buyer interest, often resulting in
multiple offer situations for well-priced, well-situated homes.
In Winnipeg, the housing market experienced double-digit house price
increases and tight market conditions, caused by the combination of a severe
lack of listing inventory and strong buyer demand. The province's economy
remained strong due to the combination of strong agricultural prices and
Winnipeg's continued stronghold on the aerospace industry and
bus-manufacturing sector. With a brimming manufacturing sector, people are
relocating from the west and emigrating from Europe to fill abundant job
opportunities, further increasing buyer demand. With Winnipeg's extremely
limited housing supply, multiple offer situations occurred during most sales
in the first quarter. Sales prices typically ranged from $10,000 to $30,000
above asking price, positioning the market strongly in the sellers' favour.
In Edmonton, housing affordability continued to improve during the first
three months of 2008. Despite a strong economy, consumer confidence began to
waver as global oil prices continue to fluctuate; area buyers have grown weary
of a housing market that is closely tied to the oil and gas sector. Following
the spike in average house prices over the last few years, the more moderated
conditions seen in the first quarter were anticipated. Employment levels in
the area remain at all-time highs, which, when combined with low lending
rates, positioned housing conditions slightly in the favour of area buyers.
In Calgary, first quarter housing market conditions were decidedly in
favour of area buyers, many of whom took advantage of the city's highest-ever
housing inventory levels to make more deliberate home buying decisions. A
24-month period of rapid growth and an abundance of properties that were built
to satisfy buyer demand are cited as some of the factors contributing to the
city's current high inventory levels.
In Saskatchewan, the momentum from last year's red-hot housing market
continued in the first quarter of 2008, pressuring average house prices
upwards by more than 40 per cent in both Saskatoon and Regina. The dramatic
spike in house price appreciation in Saskatoon and Regina can be directly
attributed to the province's rich natural resource sectors including oil,
gold, uranium, diamonds and grain - commodities that are experiencing
unprecedented global demand. In Saskatoon over the past 15 years, price
increases crept up slowly; in 2006 prices increased by 10 per cent, while in
2007, prices shot up by 50 per cent. As a result, multiple offers were seen on
a good percentage of homes in the first quarter.
Market activity in Regina echoed that of Saskatoon, as all housing types
surveyed experienced significant year-over-year double-digit increases.
Mirroring conditions in its sister city, swelling buyer demand also drove
Regina's housing market. The city's economy is experiencing tremendous growth
- from exploration projects to expanding infrastructure, Regina is readying
itself for a brilliant future. In order to accommodate the burgeoning resource
sectors, several corporations are expanding and creating an abundance of jobs;
CP Rail is making a central hub in the southwest end of the city to manage
increasing shipping demand.
House prices in Vancouver and Victoria continued to climb during the
first quarter of 2008 due to strong local and international buyer demand. In
Vancouver, the upcoming 2010 Olympic Games has added extra fervor to the
already strong economy. The city's high employment levels and relatively low
cost of borrowing money continues to attract an in-flux of buyers to the
market. While affordability in Vancouver appears to be decreasing, current
rising wages and relatively low interest rates enable buyers to enter the
housing market.
Victoria's real estate market started the year on strong and stable
footing, with average house prices rising by double digits during the first
quarter, compared to last year. A strong local economy and low lending rates
continued to draw buyers into the housing market.
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FIRST QUARTER 2008 HOUSE PRICE SURVEY DATA CHART
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Detached Bungalows Standard Two Storey
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Q1 2008 Q1 2007 Bungalow Q1 2008 Q1 2007 2 Storey
Market Average Average % Change Average Average % Change
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Halifax $207,333 $190,000 9.1% $246,333 $200,000 23.2%
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Charlottetown $155,000 $145,000 6.9% $185,000 $175,000 5.7%
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Moncton $152,000 $138,000 10.1% $135,300 $132,000 2.5%
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Fredericton $160,000 $156,000 2.6% $197,000 $187,000 5.3%
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Saint John $185,000 $161,700 14.4% $264,000 $210,400 25.5%
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St. John's $164,000 $145,000 13.1% $229,333 $200,000 14.7%
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Atlantic $170,556 $155,950 9.4% $209,494 $184,067 13.8%
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Montreal $227,799 $219,313 3.9% $332,389 $323,375 2.8%
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London $223,300 $203,500 9.7% $230,300 $211,470 8.9%
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Ottawa $311,583 $298,083 4.5% $309,833 $294,667 5.1%
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Toronto $432,679 $388,921 11.3% $544,150 $503,778 8.0%
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Winnipeg $229,125 $191,375 19.7% $242,943 $220,714 10.1%
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Regina $237,138 $158,500 49.6% $227,000 $159,500 42.3%
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Saskatoon $340,000 $226,250 50.3% $395,000 $257,500 53.4%
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Calgary $442,852 $402,933 9.9% $445,792 $411,456 8.3%
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Edmonton $330,000 $347,000 -4.9% $363,707 $377,643 -3.7%
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Vancouver $852,750 $758,000 12.5% $948,750 $837,500 13.3%
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Victoria $439,000 $384,500 14.2% $460,000 $418,000 10.0%
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National $336,834 $311,108 8.3% $400,647 $374,114 7.1%
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Standard Condominium
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Q1 2008 Q1 2007 Condo
Market Average Average % Change
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Halifax $152,000 $144,000 5.6%
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Charlottetown $105,000 $100,000 5.0%
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Moncton - -
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Fredericton $126,000 $131,000 -3.8%
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Saint John $142,000 $118,500 19.8%
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St. John's $173,333 $148,333 16.9%
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Atlantic $116,389 $106,972 8.8%
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Montreal $201,778 $197,438 2.2%
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London $124,100 $116,000 7.0%
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Ottawa $198,083 $187,333 5.7%
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Toronto $298,662 $279,442 6.9%
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Winnipeg $138,000 $122,000 13.1%
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Regina $160,917 $102,500 57.0%
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Saskatoon $220,000 $155,000 41.9%
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Calgary $281,807 $261,336 7.8%
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Edmonton $235,000 $254,667 -7.7%
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Vancouver $455,750 $403,500 12.9%
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Victoria $294,000 $248,000 18.5%
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National $240,423 $225,006 6.9%
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