Canadians are the most optimistic about the country’s real estate market in more than six years as prices reignite.
The share of Canadians predicting higher home prices over the next six months rose to 47 per cent last week, according to polling by Bloomberg and Nanos Research Group, the highest level since the survey began in 2008. That figure has risen 10 percentage points since April.
The data, based on phone interviews with 1,000 people, suggests that Canadians are brushing off forecasts of a slowdown in a market some analysts have warned is unsustainable.
Home prices rose 8.1 per cent through the first five months of the year, according to the Canadian Real Estate Association (CREA), compared with a 1.3 per cent gain over the same period in 2013, and prices may be poised for further gains if expectations for rising home values continue to whet demand.
The behaviour of buyers today would be “completely ridiculous, unless there’s an implicit assumption that there’s going to be capital gains involved, and that’s a mentality that you see in these long upswings in prices,” said Ben Rabidoux, president of North Cove Advisors Inc., a research firm that specializes in housing.
The share of Canadians who expect a drop in real estate prices was 11.6 per cent. At 35.4 percentage points, the difference between optimists and pessimists is the widest since 2009.
CREA reported that June national housing sales rose 0.8 per cent from May to June, which was the fifth consecutive monthly increase and the highest level of sales since March 2010.
Housing sales for June this year were 11.2 per cent higher than June 2013.
“Sales have improved compared to their slower start earlier this year,” said CREA president Beth Crosbie.
“That said, there are still important differences in how housing markets are faring depending on location, housing type and price point,” she added.
The national average selling price for homes sold in June was $413,215, up 6.9 per cent from the same month last year.
But CREA noted that the national average price can be skewed upward by Canada’s major housing markets.
According to CREA, the national average price rises significantly with the inclusion of markets such as Greater Vancouver and Greater Toronto, which are Canada’s largest and most expensive markets.
It is these markets that are often cited by real estate observers as having the potential to be the main contributors to a possible housing bubble.
“Excluding these two markets from the calculation, the average price is a relatively more modest $336,164, while the year-over-year increase shrinks to 5.2 per cent,” reported CREA.
“Year-over-year price growth varied among local housing markets tracked, with the biggest gains posted by Calgary at 10.74 per cent, Greater Toronto by 7.72 per cent and Greater Vancouver by 4.37 per cent.”
Locally, WinnipegREALTORS® president David Powell said June MLS® sales rose by two per cent when compared to the same month last year.
“It’s one of our better second quarter MLS® results,” said Powell, “after a slow start to 2014.
“Besides sales activity, June was especially impressive in its spike new listings coming on the market.
“This development bodes well for continued strong MLS® sales activity in July and the third quarter. To keep pace with 2013, we will need to perform at a high level.”
Nationally, the number of new listings reached their highest level since April 2010.
“At least some of the recent burst in new supply reflects the slow start to the year, when a harsh winter caused many sellers to delay listing their home in many parts of the country,” said Gregory Klump, CREA’s chief economist.
“In markets with tight supply and strong demand, the strength of sales in recent months reflects how many properties were snapped up once they finally hit the market,” Klump added.
“Because the impact of deferred listings and sales has likely run its course, activity over the second half of the year may not be able to maintain the kind of pace we’ve seen over the past couple of months.”