Despite predictions that Canada’s housing market could be set to run out of steam, home prices continue to move steadily skyward, according to the latest Royal LePage House Price Survey.
The price of a home in Canada increased 7.9 per cent in the first quarter of 2016, averaging $521,621, according to the most recent data. The report provides information on the three most common types of housing in Canada — two-storey, bungalow and condominium — in 53 of Canada’s largest real estate markets.
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All Housing Types On the Rise
Nationally, the price of a two-storey home rose 9.2 per cent year over year to $629,177, and the price of a bungalow jumped 6.8 per cent to $426,216. Condo prices increased 4 per cent to $344,491 during the same period.
Interestingly, the data reveals regional disparities of the kind we haven’t seen in over a decade — driven, at least in part, by what’s happening across the border in the Unites States, says Phil Soper, president and CEO of Royal LePage.
“Like an economic triumvirate, the impact of rock-bottom interest rates, the low Canadian dollar and a rapidly expanding U.S. workforce are stimulating economic growth and housing demand in our largest metropolitan areas,” he says.
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Oil Recession Takes Its Toll
That’s unless you live in Alberta, of course. There, the opposite is true. Once a contender with Vancouver and Toronto for the title of Canada’s hottest real estate market, Calgary’s housing prices are actually heading down — with more of decline expected.
With its large population of oil company head-office professionals and less affordable housing, Calgary is expected to see more of a price adjustment during the year than Edmonton though, where prices remain relatively flat
The price of a home in Calgary slipped 0.6 per cent year over year to $466,184 in the first quarter of 2016. When broken out by housing type, the price of a two-storey home declined 1 per cent to $518,478 while the price for a bungalow declined 0.2 per cent to $463,693. Condo prices enjoyed a slight increase, however, up 0.3 per cent year-over-year to $307,864.
Edmonton, on the other hand, saw a moderate increase in the price of a home, which rose 1.9 per cent year-over-year to $388,184, largely on the strength of a 4.3 per cent jump in the price of two-storey home to $472,388. During the same period, the price for a bungalow fell 2.0 per cent to $361,007.
“Redistribution of labour across the country is further reinforcing disparities among housing markets, as the broader impacts of the oil recession on Alberta’s economy take hold,” Soper explains. “For the first time in many years, we are witnessing an out-migration trend in the province, as economic conditions and employment prospects dim.”
This is in sharp contrast to the situation from 2011 to 2014 and in the mid-2000s, when a booming energy sector attracted families from all over Canada to Alberta, he notes.
Supply and Demand Pushing Prices Higher
Once again, the Vancouver and Toronto area markets lead the country in home price appreciation — and a steady flow of economic migrants towards these centres should put further upward pressure on home prices in the coming months.
As a result, both markets remain skewed in favour of the seller, with a shortage of inventory and growing demand maintaining the upward pressure on prices.
While the GTA sustained its trajectory of a year-over-year home price increase of 8.4 per cent to $613,733, the Vancouver market accelerated at a meteoric pace, registering a 21.6 per cent jump to $1,044,750.
The median price for a two-storey home in the GTA rose 9.3 per cent year-over-year to $724,901. Bungalows appreciated by 8.7 per cent to $603,353 whereas condos saw more moderate price rises, increasing 4.5 per cent to $366,714.
With first-time buyers nearly priced-out of the house market, the demand for condos in particular within the GTA remains steady. The resulting strong competition among buyers can only create further price pressure going forward.
Major Markets Continue to Trend Upwards
Home prices in Greater Vancouver continued to move higher during the past three months, with the price of a home rising 21.6 per cent year-over-year. The price for bungalows in Greater Vancouver surged 25.7 per cent year-over-year to $1,116,136, while two-storey homes climbed 23.6 per cent to $1,418,231. Condos also saw notable growth during the quarter, increasing 9.5 per cent to $487,300.
Outside of British Columbia and Ontario, year-over-year changes in house prices were generally modest, however, further emphasizing the bifurcation in the market — something that Moody’s Analytics says could work against the overall Canadian housing market in the future.
Lukewarm Prices in Atlantic and Central Canada
In Atlantic Canada, Moncton saw the largest gains, posting an increase of 3.4 per cent, while the remainder of the Atlantic regions surveyed saw slight to moderate declines. Home prices in Halifax, for instance, fell modestly, slipping 1.2 per cent year-over-year to $304,441. Condo prices fell by a largest margin to $257,056, a drop of 6.4 per cent.
In other parts of Western Canada, Winnipeg home prices increased 3.8 per cent year-over-year, while Regina and Saskatoon, saw slight decreases of 1.1 per cent and 0.3 per cent, respectively.