Price surges in Canada's biggest cities mask an otherwise temperate national market

Royal LePage forecasts steady price gains for the full year, inventory shortages in large cities continue

TORONTO, July 9, 2014 /CNW/ - With the harsh winter now a fading memory, the average price of a home in Canada increased between 3.9 and 5.2 per cent in the second quarter of 2014. Prices are expected to increase steadily for the balance of the year, according to the Royal LePage House Price Survey and Market Survey Forecast released today.

According to the survey, price increases were posted across housing types, with detached bungalows seeing the highest year-over-year gains, rising 5.2 per cent to an average price of $406,454.  Meanwhile, standard two-storey homes rose 5.1 per cent year-over-year to $440,972, while standard condominiums posted gains of 3.9 per cent to $258,501.

A closer look at Canada's residential real estate market points to a tale of two city types, in which big city housing activity represents a small part of the picture but accounts for a large part of the gains in national average home prices. The shortage of detached single-family houses once again led to significant price growth in Toronto. In Calgary, new listings could not keep up with strong demand from a briskly expanding workforce, driving near double-digit price growth. Vancouver, which just last year was seeing year-over-year price declines, is now posting mid-single digit appreciation in the detached home categories, pushing regional price averages up to record heights. While the Montreal market recorded lower price gains than its large metropolitan counterparts, real estate demand experienced a renewed thrust following the provincial election in April with signs of a brighter market ahead for the sector.

In contrast, smaller city markets are seeing far more moderate house price gains. In Ontario, regions outside Toronto such as London posted year-over-year price increases of 2.2 and 2.0 per cent for detached bungalows and standard two-storey homes, respectively, while Ottawa remained relatively flat at 1.3 and 0.8 per cent in the same categories. In Edmonton, the price of a detached bungalow remained essentially flat, dropping 0.2 per cent year-over-year, while standard two-storey homes rose 3.8 per cent, compared to Calgary's 9.7 and 7.9 per cent increases in the same categories.  In British Columbia's Okanagan region, Kelowna saw a 2.8 per cent rise in the price of detached bungalows compared to Vancouver's 5.2 per cent rise in the same category.   

"Chronic supply shortages are driving price spikes in Canada's major cities, masking otherwise moderate home price appreciation nationally," said Phil Soper, president and chief executive of Royal LePage.  "While a widening affordability gap in Canada's largest urban centres is characterizing the national market Canadians read about daily, year-over-year house price increases in most regions of the country are presently tracking below the historical average."

Looking ahead at the remainder of 2014, Royal LePage is projecting that the national average house price will increase at 5.1% per cent for the full-year.

"Compared to other major forecasts, our year-beginning national outlook predicted a higher level of 2014 average price appreciation, yet supply constraints in a handful of our largest cities  necessitate a revision upwards," noted Soper. "Looking ahead to 2015, we expect house prices to track more closely to the rate of general economic growth. That is, we see price increases in Canada's largest cities moderating, just as our smaller city markets should see a lift."

Canada's low interest rate environment coupled with a stable job market continues to support the country's residential real estate sector across all housing types. Core inflation remains within policy guidelines, creeping up three-tenths of a point to 1.7 per cent in June. The U.S. economy, Canada's primary export market, continues to gather strength, posting impressive job growth numbers in recent months. The condominium segment, which has been the target of scrutiny in recent months in cities such as Toronto and Vancouver has shown continued resilience, supported by shifting consumer preferences and enduring demand.  

With economic strength comes a call from some quarters for further federal government policy intervention to cool the market. "Casual market observers have renewed calls for policy intervention to cool Canada's real estate industry. We have supported most of the recent federal regulatory changes aimed at managing housing demand," stated Soper. "At this time, we feel a move to further restrict access to home ownership is not warranted.  Such policy would inevitably operate as a blunt instrument, causing unintended hardship to young Canadian homebuyers and the millions living outside a handful of our biggest cities." 

Regional Market Summaries

In Halifax, the average price of a detached bungalow increased by 1.2 per cent year-over-year, to $292,167, while the average price of a standard condominium also saw a slight lift of 0.7 per cent, to $217,500.  Standard two-storey homes meanwhile saw a slight price decrease of 1.8 per cent to $327,300.  Average Halifax house prices are forecast to increase 1.9 per cent by the end of 2014.

Robust economic conditions led to strong price appreciation in the St. John's housing market, particularly in the higher-end segments.  Both detached bungalow and standard two-storey home prices saw healthy gains year-over-year, rising by 3.3 per cent to $299,667 and 3.9 per cent to $408,000 respectively.  Meanwhile, standard condominium prices experienced a moderate drop of 1.1 per cent, to $306,000, attributed to a change in condo fee structures.

In Montreal, the average price of a detached bungalow rose 2.6 per cent to $296,250, while standard two-storey homes increased 1.7 per cent year-over-year to $404,357.  During the same period, average condominium prices remained unchanged. By year-end, Royal LePage forecasts average house prices to rise 1.7 per cent in the Montreal region. 

House prices in Ottawa remained relatively flat in the second quarter.  Detached bungalows increased 1.3 per cent year-over-year to $401,667, while standard two-storey homes remained relatively flat, rising by 0.8 per cent to $402,250. Standard condominiums saw a slight decline in price, dropping 0.7 per cent year-over-year to $257,500.  Despite the slow spring, Royal LePage predicts a 2.5 per cent increase in Ottawa prices for the balance of the year as more buyers make their way into the market.

A continued shortage in inventory led to notable increases in Toronto house prices.  Standard two-storey homes rose 8.3 per cent year-over-year to $730,806, while detached bungalows increased by 7.2 per cent to an average price of $611,906. Standard condominium prices also saw strong growth, increasing by 5.4 per cent to $380,453.   Looking ahead to the end of 2014, Royal LePage forecasts that prices will rise by 8.1 per cent in the Toronto market. 

In Winnipeg, the price of a standard condominiums rose by a healthy 5.3 per cent year-over-year to $209,023 and detached bungalows appreciated by 2.0 per cent to land at $311,015.  The standard two-storey was the only housing type to buck this upward trend as prices decreased by 2.4 per cent to an average of $336,241.  Royal LePage expects Winnipeg prices to continue to rise by 2.8 per cent for the balance 2014.

Regina posted healthy year-over-year price increases across housing types surveyed. Standard condominiums posted the highest year-over-year gains of 2.7 per cent to $211,000. Meanwhile, the average price for standard two-storey homes increased 2.6 per cent year-over-year to $372,500 while detached bungalows increased by 1.1 per cent to $333,500.  Royal LePage forecasts a 2.1 percent increase in Regina prices for the remainder of 2014.

A healthy economy, led by the oil and gas sector, led to surging demand and continued short supply in the Calgary housing market this quarter.  Detached bungalow prices increased 9.7 per cent year-over-year to $501,200 and condominiums also saw a robust increase of 9.3 per cent to $286,422.  Standard two-storey homes realized healthy gains, increasing by 7.9 per cent to $489,589.  Royal LePage predicts a 5.5 percent increase in year-over-year prices by the end of 2014. 

In Edmonton, condominiums showed the strongest gains, with the average price increasing 7.8 per cent year-over-year to $236,429, while standard two-storey homes posted a steady increase of 3.8 per cent to $372,112. Detached bungalows remained essentially flat, dropping 0.2 per cent year-over-year to $350,401.   Royal LePage forecasts moderate price appreciation of 4.5 per cent in the Edmonton housing market by the end of 2014.

House prices in Vancouver continued on their upward trajectory, with detached bungalows increasing by 5.2 per cent year-over-year to $1,107,290 and standard two-storey homes by 4.6 per cent to $1,204,011.  Meanwhile, standard condominium prices remained relatively flat, moving by only 0.3 per cent year-over-year to $491,984.  Looking ahead, Royal LePage forecasts that home prices in Vancouver will rise by 7.1 per cent by year-end.

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

Q2 2014 Average

Last Quarter Avg

Q2 2013 Average

Bungalow % Change

Q2 2014 Average

Last Quarter Avg

Q2 2013 Average

2 Storey % Change

Q2 2014 Average

Last Quarter Avg

Q2 2013 Average

Condo % Change

Halifax

292,167

295,500

288,667

1.2%

327,300

325,933

333,167

-1.8%

217,500

218,950

215,950

0.7%

Charlottetown

175,000

173,000

173,000

1.2%

205,000

205,000

205,000

0.0%

130,000

130,000

128,000

1.6%

Fredericton

200,000

203,000

207,000

-3.4%

215,000

215,000

220,000

-2.3%

145,000

151,000

158,000

-8.2%

Moncton

149,648

153,000

153,000

-2.2%

152,302

135,000

143,300

6.3%





Saint John

179,150

181,425

177,828

0.7%

256,038

278,145

279,922

-8.5%

155,000

213,427

163,900

-5.4%

St. John's

299,667

302,000

290,000

3.3%

408,000

408,333

392,667

3.9%

306,000

300,000

309,333

-1.1%

Montreal

296,250

294,557

288,868

2.6%

404,357

406,179

397,643

1.7%

239,611

239,561

239,528

0.0%

Ottawa

401,667

395,667

396,483

1.3%

402,250

398,500

398,983

0.8%

257,500

258,500

259,417

-0.7%

Toronto

611,906

589,250

571,013

7.2%

730,806

716,698

674,905

8.3%

380,453

364,979

361,128

5.4%

Hamilton

240,416

234,127

222,761

7.9%

310,757

301,289

294,928

5.4%





Winnipeg

311,015

306,507

305,010

2.0%

336,241

325,072

344,598

-2.4%

209,023

204,643

198,431

5.3%

Regina

333,500

330,000

330,000

1.1%

372,500

371,500

363,000

2.6%

211,000

215,000

205,500

2.7%

Saskatoon

375,000

363,750

369,250

1.6%

399,250

393,500

394,250

1.3%

261,333

265,000

254,000

2.9%

Calgary

501,200

480,222

456,900

9.7%

489,589

472,644

453,789

7.9%

286,422

274,700

261,933

9.3%

Edmonton

350,401

341,651

350,975

-0.2

372,112

371,000

358,461

3.8%

236,429

224,250

219,321

7.8%

Vancouver

1,107,290

1,062,318

1,052,500

5.2%

1,204,011

1,148,473

1,151,250

4.6%

491,984

482,800

490,475

0.3%

Victoria

467,000

487,000

453,100

3.1%

478,000

491,000

461,000

3.7%

272,000

282,000

267,400

1.7%

National

406,454

380,765

386,547

5.2%

440,972

428,943

419,614

5.1%

258,501

252,174

248,750

3.9%

 

2014 Royal LePage Market Survey Forecast

Average House Price % Change

Market

Province

2014/2013
% Change

2014 Forecast

2013

2012

Halifax

NS

1.9%

280,000

274,880

270,742

Montreal

QC

1.7%

326,000

320,490

325,655

Ottawa

ON

2.5%

368,000

358,876

352,610

Toronto

ON

8.1%

566,500

524,089

498,973

Winnipeg

MB

2.8%

276,000

268,382

255,058

Regina

SA

2.1%

319,000

312,355

301,145

Calgary

AB

5.5%

461,000

437,036

412,315

Edmonton

AB

4.5%

360,500

344,977

334,318

Vancouver

BC

7.1%

822,000

767,765

730,063

National


5.1%

402,000

382,466

363,740

 

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 second quarter of 2014. A printable version of the second quarter 2014 survey will be available online on August 6, 2014. 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 15,000 real estate professionals in over 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 symbol TSX:BRE.

For more information visit: www.royallepage.ca.

SOURCE Royal LePage Real Estate Services




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