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Canadian house prices to stay soft until mid-2014: survey

A woman walks past homes for sale in the Kitsilano neighborhood in Vancouver, B.C., in September, 2012. Royal LePage expects Canadian house prices to remain soft until mid-2014.

Darryl Dyck/The Globe and Mail

Royal LePage expects Canadian house prices to remain soft for almost another year.

But the bottom line in a new survey is that they'll continue to rise. Just at a slower pace.

Average prices for typical two-storey houses and detached bungalows climbed 2.7 per cent in the second quarter from a year earlier, the real estate firm said Tuesday, to $419,614 and $386,547, respectively.

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Prices for standard condominiums rose at a slower pace, just 1.2 per cent, to $248,750.

The company now expects prices will have jumped by 3 per cent over the course of 2013 from 2012, with regional differences, of course.

And, like many Bay Street economists, Royal LePage does not see a meltdown waiting in the wings.

"Those hoping their predictions of a bursting bubble and cataclysmic drops in home values will come true are out of luck again," said the company's chief executive officer, Phil Soper.

"Price appreciation in most markets across the country has been well below the long-term average for Canada and will remain so through to the end of the year," he added in the study.

"We expect to see the number of homes trading hands to begin to rise slightly on a year-over-year basis in the second half of 2013, with price softness continuing until mid-2014, at which point we'll see an emergence from the current cycle."

Here's what Royal LePage expects to see across the country this year, compared to last, in terms of average prices:

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  • Vancouver, up 2 per cent to $744,500
  • Edmonton, up 1.6 per cent to $339,500
  • Calgary, up 6.5 per cent to $439,000
  • Regina, up 5.8 per cent to $318,500
  • Winnipeg, up 3.9 per cent to $265,000
  • Toronto, up 2.5 per cent to $511,500
  • Ottawa, up 1.2 per cent to $357,000
  • Montreal, up 1.7 per cent to $331,300
  • Halifax, up 1.6 per cent to $275,000

The real estate market cooled rapidly since Finance Minister Jim Flaherty unveiled his latest mortgage restrictions a year ago Tuesday. Sales slumped, but prices did not collapse.

Analysts are now watching to see what impact the recent rise in mortgage rates could have on the market, and Mr. Soper believes it will actually help.

"Paradoxically, we expect the first increases in interest rates to be constructive for the housing market," he said.

"Rising rates would be driven by a strengthening economy, reduced unemployment and improving consumer confidence."

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