Canadian Housing Market Moderates as Prices Move Toward Long-Term Average
Royal LePage reports a not too hot, not too cold “Goldilocks market” in most regions of Canada
TORONTO, October 15, 2014 – Housing prices across the country are showing signs of moderating, according to the Royal LePage House Price Survey, released today. According to the survey, the average price of a home in Canada rose between 4.4 per cent and 6.1 per cent year-over-year in the third quarter of 2014. During this period, the average price of a standard two-storey home rose 5.5 per cent to $441,714, while detached bungalows increased 6.1 per cent to $405,101. Condominiums on average showed slightly lower year-over-year gains, posting a 4.4 per cent increase to $257,377.
“In the seven years since the Canadian housing market began its recovery from the worldwide recession, home price growth has been robust, often greater than the long-term average of approximately five per cent,” said Phil Soper, president and chief executive of Royal LePage. “We are now experiencing a natural slowing in the rate of year-over-year price appreciation, with real estate markets moderating in most parts of the country, a transition to what our agents refer to as a ‘Goldilocks market,’ one that is neither too hot, nor too cold. To be clear, we expect home prices to continue to grow in the months ahead, but at a slower rate than we have seen in recent years.”
Toronto and Calgary led the country in both price appreciation and unit sales levels, bucking the trend of moderation seen in most regions of the country. In the third quarter, the average price of a detached home in Toronto increased between 7.2 and 8.0 per cent, with the city edging toward 2007 peak units sales levels. In Calgary, housing demand from a rapidly expanding workforce once again outpaced new listings, putting continued upward pressure on prices in the city.
Canada’s economic performance continued to improve over the last quarter. Against a backdrop of continued low interest rates, conditions were generally supportive of the nation’s housing industry. A lower Canadian dollar should continue to stimulate international demand and growth in the country’s export sector. The Bank of Canada believes that business investment will continue to improve through 2015, stimulating job growth and reducing slack capacity in the economy. Externally, the IMF (International Monetary Fund) has revised upwards its growth expectations for both Canada and the United States, stating that the recovery appears largely on track.
“Amidst political and economic instability in many corners of the world, the Canadian and American economies are expanding nicely,” said Soper. “It is particularly gratifying to see our neighbours to the south back on track as a healthy America is a hungry America, and Canadian exports are on the menu. The Canadian dollar is currently sitting in a sweet spot that is low enough to support economic growth in an impactful way, yet not so low as to suggest pending economic troubles. Expect the resulting growth in exports to stimulate improvement in domestic business investment which should drive new and better jobs, and nothing save low interest rates propels the housing market like job creation.”
“The brisk pace, sometimes approaching frenetic, that we have seen in recent months in some of Canada’s largest real estate markets is slowing. Slower, yet still growing. And the current environment remains supportive of a healthy and sustainable housing market,” concluded Soper. “Further, early indicators, such as declines in the number of new listings in some key cities, suggests that as demand slows, so shall supply, further protecting Canadian homeowners’ primary investment.“
Regional Market Summaries
A surplus of inventory and slowed activity levels left Halifax housing prices relatively flat in the third quarter. Standard condominium prices increased by 1.6 per cent year-over-year to $217,500 while the price of a standard two-storey home saw only a slight lift of 0.8 per cent to $331,833. Detached bungalows were the only housing type to see a price decrease, dipping 1.6 per cent to $294,333.
The St. John’s market, in contrast, continued to experience strong price appreciation across all housing types. The price of standard two-storey homes experienced the greatest gains, jumping 6.0 per cent year-over-year to $424,167. Detached bungalow prices followed closely, rising 5.9 per cent to $313,500. Standard condominium prices also realized healthy increases, increasing 5.1 per cent to $331,500.
In Montreal, the average price of detached bungalows increased 2.6 per cent year-over-year to $296,857. In the same quarter, standard two-storey homes and condominiums remained relatively flat, rising 0.2 per cent to $403,714 and 0.5 per cent to $241,000, respectively.
The slower winter and spring seasons left the Ottawa housing market with a surplus of inventory in the third quarter, holding prices relatively flat in the region. Detached bungalow and standard two-storey home prices each increased by 1.2 per cent year-over-year, to $403,091 and $406,264, respectively. Standard condominium prices saw a slight decline in price, dropping 0.3 per cent to $258,132.
Low levels of inventory combined with an unseasonably active August market contributed to significant price increases across all major Toronto housing types. Standard condominium prices saw the greatest increase rising 8.0 per cent year-over-year to $383,039. Detached bungalows rose 7.2 per cent to $618,088, while prices for standard two-storey homes increased 7.6 per cent to $733,317.
Mixed results characterized the Winnipeg housing market in the third quarter. Increasing inventory levels kept the price of detached homes relatively flat, with detached bungalows rising 0.5 per cent year-over-year to $308,706, and standard two-storey homes experiencing a slight decline of 1.4 per cent to $341,863. Standard condominium prices, in contrast, surged by 6.8 per cent to $208,510.
The Regina housing market also witnessed varied results this quarter. Significant levels of new construction have tempered the price growth seen in recent quarters, and have pushed prices down in the detached home market. The average price for standard two-storey homes decreased 6.9 per cent year-over-year to $346,450, and detached bungalow prices dropped 7.9 percent to $307,250. In contrast, the average price for a standard condominium continued to appreciate, increasing 1.0 per cent year-over-year to $214,748.
The Calgary housing market continued to be among the strongest in the country. Demand was strong across all housing types, and continued to outstrip supply. The average price for standard condominiums surged 11.8 per cent year-over-year to $294,156 and detached bungalows increased 10.8 per cent to $515,844. Standard two-storey home prices were consistent with this trend, increasing 9.2 per cent to $499,811.
Edmonton also saw strong price appreciation across all housing types surveyed. Detached bungalow prices showed the strongest gain, increasing 6.0 per cent year-over-year to $357,240. Standard two-storey home prices also continued to climb, rising 5.3 per cent to $379,463, while standard condominiums rose a healthy 5.8 per cent to $232,340.
Price increases remained strong in the Vancouver housing market in the third quarter. Detached bungalow prices saw the largest increase, climbing 6.1 per cent to $1,135,009. Standard two-storey homes also experienced strong growth, rising 5.6 per cent to $1,220,909. In contrast, standard condominium prices cooled slightly, dipping 0.2 per cent to $502,869.
Royal LePage’s quarterly House Price Survey shows the annual change of prices for key housing segments in select national markets. Click here to view the chart.
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 third quarter of 2014. A printable version of the third quarter 2014 survey will be available online on November 12, 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.
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For further information, please contact:
Kaiser Lachance Communications
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Royal LePage Real Estate Services