There will be a softening in the Canadian housing market over the next few months, but no U.S.-style free-fall, according to a new survey from Royal LePage.
“Although some commentators are predicting that the sky will fall on the Canadian housing market in a U.S.-style implosion, we lack the structural conditions that precipitated the housing crash in the United States six years ago,” said Phil Soper, the president and chief executive of Royal LePage Real Estate Services.
“A broader slowdown is expected in the months ahead, but fears of a U.S.-style correction are completely unfounded,” he added.
The Royal LePage House Price Survey showed that the average price of a home in Canada increased between 5.7 and 7.8 per cent in the third quarter of 2011, compared to the previous year.
The strength of home price appreciation in the third quarter defied expectations as very low interest rates buoyed consumer confidence in a comparatively stable Canadian economy. Year-over-year gains appear deceptively strong in comparison to a weak third quarter of 2010.
“The strength in Canada’s national housing market conceals signs of predictable softening in some regions,” said Soper.
“The third quarter saw a return to a normal seasonal business cycle as price appreciation slowed in many areas — with some average values even falling slightly — after the busy spring trading season.
In the third quarter of 2011, the national average price of a detached bungalow rose 7.8 per cent year-over-year to $349,974, while standard two-storey homes rose 7.7 per cent to $388,218 and standard condominiums rose 5.7 per cent to $239,300.
In Winnipeg, the average price for a bungalow rose 5.1 per cent to $276,500, while the standard two-storey home rose 4.4 per cent to $299,875 and the rise was 6.4 per cent for to $174,286 for a standard condominioum.
The survey reported that population growth is fueling Winnipeg’s healthy price appreciation.
“Canadian homeowners have turned a deaf ear to the negative economic situation shaking housing markets in Europe and the United States,” said Soper.
“A resilient domestic economy coupled with the stimulative effect of ultra low interest rates has extended the post-recession bounce in house prices, but there is evidence of over-shooting in some markets.”
Within Winnipeg neighbourhoods, increases in the average selling price year-over-year are varied from a rise of 8.2 per cent for a bungalow to $277,000 in Charleswood to a 1.4 per cent increase for the same housing type to $290,000 in South St. Vital.
In the northwest, a standard two-storey rose by 10 per cent to $319,000, while the same home only rose in cost by 0.3 per cent in River Heights to $307,000.
The biggest increase in the average price of a standard condo was in Fort Richmond, where there was a 12. 9 per cent increase to $184,000. The lowest increase of 0.5 per cent was in the northwest, where the average price rose to $206,000.