Canada's housing market

both vigorous and stable

    - Country's market poised to show growth throughout 2006 -      TORONTO, Sept. 28 /CNW/ - For most of Canada, the housing market exhibited moderate price increases and stable unit sales during the third quarter. Wide regional variances continued to be the dominant characteristic in the market, exemplified by frenzied levels of activity and double digit price gains observed in the energy and commodity rich Western provinces, and more reasonable sales volumes and moderate price appreciation in Ontario, Quebec and Atlantic Canada, according to a report released today by Royal LePage Real Estate Services.     Nationally, market trends established through the first three quarters are forecast to continue for the remainder of the year. Robust economic conditions, low unemployment rates, modestly growing salaries and wages, and sound consumer confidence contributed to the overall strength of the residential real estate sector.     Of the housing types surveyed, the highest average price appreciation occurred in detached bungalows, which rose to $300,365 (+16.3%) year-over-year, followed by standard condominiums, which rose to $211,562 (+14.2%), and standard two-storey properties, which increased to $365,380 (+13.2%).     "Canada's sturdy housing market continued to demonstrate steady growth during the third quarter. For all but the west, we have moved on from the frenzied expansion that characterized the first half of this decade, and are poised to show continued growth at a more moderate pace," said Phil Soper, president and chief executive officer, Royal LePage Real Estate Services. "Gone is the sellers' market that we have lived with for some years. We welcome the more reliable conditions that are characteristic of a healthy balanced market."     Despite the double-digit rise in average national house prices, considerable regional variances were exhibited again this quarter. The shift to balanced market conditions, which began in late 2005, has continued throughout most of the Central and Eastern regions of the country. In the core energy producing western provinces, the combination of very high in-migration, manageable affordability, and a shortage of inventory has driven record breaking price appreciations.     Echoing the second quarter and supported by Alberta's rapidly expanding economy, Calgary and Edmonton led the charge of Canadian cities with the largest house price appreciation in all housing types surveyed.     In Ottawa and Toronto, growth remained steady, supported by solid economic fundamentals, an increase in available inventory and strong consumer confidence. While the pace of price appreciation in Ontario leveled off slightly, the province's real estate market remains poised for modest growth. In Atlantic Canada, new housing and condominium construction offered buyers greater selection at more competitive prices, resulting in a slower rate of price appreciation when compared with 2005.     While the pace of growth in Canada has slowed, the domestic housing market is expected to outperform the American market. The economic and financial fundamentals driving the residential real estate sector in Canada are markedly different than those found in the United States.     Added Soper: "Canada's housing market is likely to outperform the American market through 2007. A number of factors are working in Canada's favour, including healthy personal and governmental debt levels, the relatively modest rise in interest rates in our country, and general affordability in our major cities. In addition, Americans are now seeing the downside of a tax system that encourages maximum homeowner leverage, and aggressive financial products such as zero- and negative-amortization mortgages that work only in a high price growth environment."      <<                              REGIONAL SUMMARIES     >>      Balanced conditions continued to characterize the housing market in Halifax, as significantly higher inventory levels helped to moderate the rate of price appreciation. Buyers were increasingly choosy, taking more time looking for newer, low-maintenance properties that were not in need of renovations.     The housing market in Moncton remained healthy and strong as a slight increase in inventory helped to moderate the rate of price appreciation compared to the same period in 2005. Activity was brisk throughout August and September and is expected to remain this way through the fourth quarter.     The housing market in Saint John underwent its traditional summer slowdown in the third quarter, with activity picking up towards the end of the quarter. The local economy continued to thrive, as construction on a new 600,000 square-foot shopping area has begun, bringing several new box stores to the area. Buyers have begun seeking less expensive fixtures for their homes and are instead opting for more affordable housing options.     In Charlottetown, the housing market started to move towards balanced conditions, as some sellers had to begin to lower the asking prices on their homes to make them more competitive. Activity from out-of-town and US buyers was down slightly compared to 2005, likely attributable to the strong Canadian dollar. Inventory levels began to creep up in the third quarter, providing buyers with more options when looking for a home.     Activity in St. John's slowed slightly in the third quarter, particularly among higher-priced properties, where there was a slight over-supply of homes priced over $200,000. Listing periods have increased when compared with 2005, as some of the pent-up demand that had characterized the market over the last few years has been satisfied, resulting in more normal, balanced conditions.     Montreal's housing market recorded modest increases in average house prices, due to a slight seasonal slowdown in the third quarter as inventory levels rose. Part of this can be attributed to the fact that many renting first-time buyers were motivated to close on the purchase of a home by July 1, when rental leases expire in Quebec. Once this date has passed some of the pressure is taken off the market, allowing buyers to visit more homes before making a purchase.     Ottawa held its position as one of the country's most stable housing markets in the third quarter, reinforced by a vibrant local economy and strong confidence, resulting in modest increases in average house prices. The city centre remained a bright spot in Ottawa, with homes in this area attracting attention due to their convenient location and proximity to downtown amenities.     The housing market in Toronto sustained healthy activity levels throughout the third quarter, as a strong economy helped to maintain demand across the city, causing average house prices to rise moderately. Toronto has continued to experience modest growth in average house prices, and has been driven primarily by purchasers who are buying homes as their principle residence, rather than for investment.     The vibrant Winnipeg housing market continued to show its strength as house prices rose during the third quarter. The booming local economy resulted in a historically low unemployment rate, helping to bolster consumer confidence and Winnipeg's ranking as the city with the lowest capitalization rate among the country's larger cities - helped to encourage buyers to enter the market.     In Regina, the market experienced a slight seasonal slowdown through July, as there were fewer purchasers in the market due to summer vacations. In August, activity resumed to the busy pace previously seen in the spring months, as the influx of purchasers made it more difficult to find a home due to the shortage of available inventory.     Activity in Saskatoon remained brisk as the market maintained its momentum from the busy spring sales period. The economy in Saskatoon remains vibrant, as employment opportunities are abundant with many businesses struggling to make hires and having to recruit outside the province.     Calgary's housing market recorded blazing average house price increases in the third quarter, in all surveyed categories. The burgeoning economy, low unemployment rates and low inventory levels remained the leading factors that pressured Calgary's house prices upwards. However, regardless of the soaring prices that characterized the market - even during the typically slower summer season - it is expected that activity will become slightly more balanced, as buyers are becoming more reluctant to participate in the frenetic activity.     Edmonton's booming local economy continued to thrive in the third quarter as activity in the oil sands north of the city continued to flourish. Edmonton remained the hub of activity for those coming to work in the oil industry, maintaining tight inventory levels across the city, resulting in prices increasing at record levels. However, as inventory levels continued to improve in the third quarter the rate of price appreciation should moderate slightly towards the end of 2006.     While Vancouver has seen a slight reprieve from the severe shortage of inventory that had previously characterized the market, supply is still unable to meet demand, driving house prices upwards. Vancouver has a very diverse group of active buyers - from first-time home buyers to baby-boomers to foreign investors - all of whom fuel the demand for houses, placing added pressure on tight inventory levels.     Victoria's market is vibrant and supported by strong economic fundamentals, fuelled by a booming tech sector and a migration of young people into the city that has continued to support the area's house price increases; while increased inventory levels have afforded buyers more time when searching for a home, helping to normalize the market's pace.      <<       Survey of Canadian Average House Prices in the Third Quarter 2006