Canadian Housing Market Exceeds Expectations In First Quarter
Strong consumer confidence and healthy provincial economies boost demand
Canada’s real estate market got off to a surprisingly strong start in 2007 with average house prices rising in all major markets surveyed, according to a first quarter report released today by Royal LePage Real Estate Services. The combination of resilient consumer confidence, moderately low interest rates and improved affordability across most of the country led to greater than expected activity during the typically slower first quarter.
Of the housing types surveyed, the highest average price appreciation occurred in standard condominiums, which rose to $230,146 (+16.3%) year-over-year, followed by detached bungalows, which rose to $316,993 (+14.9%), and standard two-storey properties, which increased to $378,148 (+11.8%).
While national average house prices experienced robust appreciation, significant regional differences continue to characterize the market. Fuelled by the energy sector, Alberta’s economy continued to show extremely high price appreciation, while more moderate levels were noted in the central and eastern regions of the country. A notable ripple effect from the booming markets in Alberta was observed in Saskatchewan as Saskatoon reported unprecedented spikes in house prices and activity, driven by in-migration and strong demand as former residents returned from cities like Calgary, escaping skyrocketing housing prices and the rapidly rising cost of living.
“The strength of last year’s housing market has carried into the first quarter of 2007, creating a robust market, chock-full of activity with house prices rising in all major cities,” said Phil Soper, president and chief executive, Royal LePage Real Estate Services. “The recent months have produced record-breaking sales levels in many markets and unwavering demand – momentum which will undoubtedly be maintained through the always busy spring market.”
Sustained growth in the urban centres and surrounding suburbs of most of the country’s major cities is expected to characterize the real estate landscape in 2007. Buyers’ demands for affordable housing and the desire to be near the city’s core continues to fuel expansion in the condo market, while suburban neighbourhoods continue to develop as they attract a large part of the population growth.
Added Soper: “A number of factors are contributing to the vibrancy of the Canadian market. First-time buyers continue to be active despite expectations that many would be priced-out of the market; employment levels continue to improve, resulting in tight labour markets and increasing salaries; and stable interest rates have led homebuyers to feel confident that the cost of borrowing won’t spike anytime soon.”
The rapidly expanding Alberta economy has driven employers to place increased focus on recruitment from out of the province, helping position Edmonton and Calgary among the top three cities with the highest house price appreciation across all housing types surveyed. Healthy economies in Saskatchewan and Manitoba have also led to significant market activity and rising house prices.
In Toronto, strong demand and a limited number of well-priced, quality listings led to moderately rising, yet steady real estate price appreciation. Despite increases that are not as steep as in other major cities, Toronto is still anticipated to have another near record year.
Mild winter conditions and healthy local economies boosted consumer confidence in Ottawa and Atlantic Canada provoking buyers to enter the market, driving up both activity and house prices at a steady pace. Similarly, strong consumer confidence and a thriving economy in Montreal drove purchasers to the market resulting in moderate price increases, and record-breaking levels for units sold.
In most regions of the country, slight increases in inventory levels have afforded buyers with more options and the opportunity to take more time in making their purchasing decisions.
Toronto’s real estate market has once again been characterized by high levels of competition, particularly in the most sought after neighbourhoods of central Toronto. Rising property prices provoked some affluent purchasers, searching for homes priced in the $1-million range, being priced out of traditionally upscale neighbourhoods. Areas such as Riverdale, High Park, Parkdale and the Annex offering high-quality homes at more affordable prices subsequently received additional attention. The condo market has remained a bright spot in Toronto’s real estate market, with increases to inventory levels as new construction helps to satiate the demand of purchasers.
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