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.“
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