Canada's housing market begins the year with slightly positive price trends

Apr 04, 2013, 06:00 ET from Royal LePage Real Estate Services

Unprecedented combination of low interest rates, flattening house prices and strengthening economy provide support to Canada's housing market

TORONTO, April 4, 2013 /CNW/ - The Royal LePage House Price Survey released today showed that house prices remained relatively flat in the first quarter of 2013 compared to the first quarter of 2012, recording that the average price of a home in Canada increased between 1.2 per cent and 2.4 per cent. An unprecedented combination of flat or in some regions decreasing house prices, inexpensive mortgages and the confidence brought on by an improving economy has resulted in a unique residential real estate environment.

In the first quarter of 2013, the national average price of a standard two-storey home increased 2.2 per cent, compared to the previous year. Over the same period, the national average price of a detached bungalow increased 2.4 per cent and the average price of a standard condominium increased 1.2 per cent.

"2013 finds the Canadian housing industry in a highly unusual place. The combination of very low mortgage rates and flat home prices, against a background of general economic improvement across the nation, is not something we've seen before," said Phil Soper, president and chief executive of Royal LePage. "Typically one of these variables is moving hard in an opposite direction. While some have spoken loudly about impending market volatility and dramatic downward pressure on home prices, we are simply not seeing evidence of this. The current environment is very supportive for housing. Those waiting for big declines in home prices will likely be disappointed."

The Canadian economy stabilized during the first quarter of 2013 and the country surpassed expectations with the addition of 51,000 jobs1 during the month of February. Domestic economic strength is buttressed by an improving U.S. economy and the expectations of a growth in resource consumption driven by China. At the same time, despite the improving economy, the Bank of Canada has been clear about its intention to keep interest rates low for the near- and mid-term.

"There is some degree of uncertainty regarding the of length time these factors will remain in place," said Soper. "Of the three variables we identified, economic strength is the most likely to persist based upon the upswing in employment, our well-educated workforce, a solid financial sector and the influence of our natural resource sector. Given recent and repeated signals from the Bank of Canada, we can expect interest rates to remain low for some time to come. The continued stability of house prices is much harder to gauge."

"Timing house prices to trends in a given neighbourhood is very difficult," said Soper. "And it is important to remember that Canada is a collection of regional markets. Case in point, we see renewed strength in the Alberta and Saskatchewan markets in early 2013, based on the health of the energy sector. Across the mountains in Vancouver, affordability concerns dampened demand significantly. The resultant correction in home prices there may attract a new round of buyers before year end."

1 Source: Statistics Canada, Labour Force Survey, February 2013. < >.

Regional Market Summaries

In the first quarter of 2013, Halifax continued to experience consistent growth, with significant prices increases across housing types surveyed. Detached bungalows made the highest leap, increasing 7.8 per cent year-over-year to $294,667St. John's witnessed some of the highest average price gains in Canada, with two-storey homes rising 10.6 per cent. This was due in large part to an upswing in activity by move-up and executive buyers purchasing higher priced homes.

Montreal home prices remained relatively flat in the first quarter 2013. Standard two-storey homes saw the largest increase of 1.4 per cent to an average price of $392,929, while standard condominiums experienced the smallest rise of 0.4 per cent to $240,044.

Ottawa's real estate market remained relatively flat, with house price gains ranging from 0.8 to 1.9 per cent. While standard condominiums saw the largest price gains, unit inventory for this housing category shot up 41 per cent compared to last year.

Toronto posted moderate growth in the first quarter, with average price gains of 1.8 to 4.0 per cent for housing types surveyed. The quarter saw a slight decrease in volume, even among first-time home buyers, who are traditionally the most active group. At the same time, multiple offer situations and bidding wars were still taking place in some areas of the city.

The 2013 real estate market was off to a strong start in Winnipeg.  Detached bungalows posted the largest increase of 6.9 per cent to $302,896. Multiple offer and bidding war situations remain prevalent, with 35 per cent of listings selling above asking price.

With inventory yet to catch up to an influx of first-time buyers moving to the city, Regina continued to see strong price increases.  Standard two-storey homes saw the highest increase, rising 12.7 per cent year-over-year to an average price of $337,000.

Low inventory also put upward pressure on prices in Calgary, with increases of 5.1 to 6.8 per cent for housing types surveyed. Although they experienced the smallest price increase, standard condominiums were the most active housing category in the first quarter of 2013. In contrast, Edmonton prices remained relatively flat with price changes ranging from a decrease of 0.2 per cent to an increase of 1.7 per cent across surveyed housing types.

Vancouver posted year-over-year decreases of 5.1 to 5.6 per cent across housing types. The market witnessed an overall reduction in activity from both buyers and sellers, which continued to drive prices down.

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 Q1 2013 Average Last
Quarter Average
Q1 2012 Average Bungalow
Q1 2013 Average Last
Quarter Average
Q1 2012 Average 2 Storey
Q1 2013 Average Last
Quarter Average
Q1 2012 Average Condo
% Change
Halifax 294,667 292,833 273,333 7.8% 319,833 314,500 306,667 4.3% 215,950 208,500 201,000 7.4%
Charlottetown 173,000 172,000 170,000 1.8% 205,000 205,000 200,000 2.5% 128,000 127,000 125,000 2.4%
Moncton 158,000 156,000 145,700 8.4% 137,200 137,800 134,800 1.8%        
Fredericton 207,000 205,000 205,000 1.0% 220,000 220,000 208,000 5.8% 158,000 158,000 157,000 0.6%
Saint John 176,000 176,357 191,000 -7.9% 275,000 305,230 293,250 -6.2% 153,000 188,656 161,500 -5.3%
St. John's 290,000 271,667 262,500 10.5% 387,667 367,333 350,500 10.6% 300,000 289,333 274,000 9.5%
Montreal 287,850 282,911 286,000 0.6% 392,929 379,546 387,429 1.4% 240,044 240,272 239,000 0.4%
Ottawa 388,583 386,000 385,667 0.8% 391,250 389,167 387,833 0.9% 262,500 263,667 257,667 1.9%
Toronto 565,700 558,345 544,450 3.9% 671,252 668,133 645,467 4.0% 359,671 356,865 353,355 1.8%
Winnipeg 302,896 304,157 283,375 6.9% 319,409 320,226 309,250 3.3% 194,269 192,062 186,143 4.4%
Regina 329,250 333,330 316,500 4.0% 337,000 382,500 299,000 12.7% 208,500 210,750 199,000 4.8%
Saskatoon 352,500 363,750 338,750 4.1% 384,000 376,750 372,250 3.2% 261,333 261,333 237,000 10.3%
Calgary 451,833 440,600 442,989 6.8% 439,800 434,667 418,233 5.2% 260,767 250,078 248,111 5.1%
Edmonton 329,679 331,429 324,143 1.7% 357,109 356,286 354,714 0.7% 202,838 202,714 203,143 -0.2%
Vancouver 1,013,750 1,001,250 1,068,500 -5.1% 1,116,250 1,102,500 1,182,250 -5.6% 481,250 481,250 510,000 -5.6%
Victoria 452,140 470,000 470,000 -3.8% 452,115 475,000 459,000 -1.5% 267,000 258,000 287,000 -7.0%
National 364,857 356,790 356,306 2.4% 407,044 390,444 398,282 2.2% 246,071 239,374 243,153 1.2%

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 Current figures will be updated following the complete tabulation of the data for the first quarter of 2013. A printable version of the first quarter 2013 survey will be available online on May 3, 2013.

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 14,000 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.

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SOURCE Royal LePage Real Estate Services