Housing market heats up

Royal LePage Q1 Survey: Real estate firm cites 'low borrowing costs, improving consumer confidence'

Although it experienced uneven growth nationwide, the Canadian housing market was generally buoyed by strong consumer demand in the first quarter of 2010, according to the Royal LePage House Price Survey released yesterday.

"The first quarter of 2010 continued where 2009 left off, with more Canadians enthusiastically participating in a rejuvenated residential real estate market," Phil Soper, president and chief executive of Royal LePage Real Estate Services, said in a release. "One of the earliest sectors of the economy to return to growth after the difficult recessionary period, the housing sector has been a prime beneficiary of low borrowing costs and improving consumer confidence."

House prices were up across all key housing types surveyed by Royal LePage, with the average price of a detached bungalow in Canada rising 11 per cent to $329,209 in the first quarter, compared with the first quarter a year earlier. Standard two-storey homes rose 10.3 per cent, to $365,141, and standard condos were up 10.9 per cent, to $228,963.

The survey, which looks at 250 neighbourhoods coast to coast, found three different trends across the country.

The first pattern, seen in urban centres like Toronto, Vancouver and Victoria, was a roller-coaster effect in which prices dropped sharply, then rose dramatically to levels that exceed pre-recessionary prices. The second trend saw non-stop growth in markets like Halifax, Ottawa, Regina, Saint John, St. John's and Winnipeg. The third pattern saw level markets, where house prices have remained relatively unchanged in centres like Montreal, Calgary, Edmonton and Moncton.

The report notes, however, that price increases in all markets are expected to ease in mid- to late-2010.

"Even in our most frenzied pockets of market activity, the inevitable rise in interest rates coupled with home price appreciation will rein in demand as affordability erodes," Soper said.

"Expect house prices to continue to rise, but the rate of appreciation should ebb steadily, month by month, throughout the remainder of the year, as balance returns to the industry."

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