Low inventory continues to fuel house prices
TORONTO, Oct. 3, 2012 /CNW/ - The Royal LePage House Price Survey
released today showed healthy year-over-year price gains for detached
bungalows and two-storey homes surveyed in Toronto as inventory remains
low in the region. Standard condominiums, which are more readily
available, posted more modest gains.
Detached bungalows witnessed the largest year-over-year price increase
at 5.9 per cent to $558,900. Prices for standard two-storey homes rose
5.4 per cent year-over-year to $660,115, while standard condominiums
saw an increase of 2.7 per cent to $359,673.
"Last year, buyers looking to purchase in Toronto felt a lot of pressure
to get into the market as quickly as possible, before prices continued
to increase at above average rates," said Gino Romanese, senior vice
president, Royal LePage Real Estate Services Ltd. "Given all the recent
talk about a slowing Canadian housing market, buyers feel like they
have more time. However, Toronto is still seeing multiple offers on a
weekly basis and appropriately priced homes are selling for at least
Romanese commented that despite higher inventory for standard
condominiums, resale inventory is often tight for desirable buildings
as older units offer more space and tend to be located in more
Nationally, the average standard two-storey home in Canada increased 4
per cent year-over-year rising to $403,747, while detached bungalows
rose 4.8 per cent to $366,773. Standard condominiums witnessed an
increase of 1.8 per cent to $243,607. Most cities in Canada experienced
modest price appreciation in the quarter, but fewer homes were sold
compared to the same period in 2011.
"A drop in the number of homes trading hands typically precedes a period
of softening house prices. Where there is reduced demand, those that
want to sell their homes adjust their asking price to stimulate
interest. Home sales were positive in July, fell 9 per cent
year-over-year in August and we are expecting September to show a
decline as well," said Phil Soper, president and chief executive, Royal
LePage. "We had predicted this cyclical change early in the year, a
natural market reaction after a period of strong expansion. Changes to
mortgage regulations, which took effect on July 9th, accelerated the correction."
In July, the Minister of Finance announced that the maximum amortization
period for insured mortgages would be reduced to 25 years from 30
years. This was the fourth intervention in just four years and the most
impactful. Potential first-time buyers, which in a typical market
represent one third to one half of all purchase transactions, felt the
"While hard-hit in the short-term, we expect first-time buyers to adjust
to the tougher mortgage qualifications. The dream of homeownership is
very much alive among young Canadians. They may remain renters for some
time as they save; some will opt for less expensive neighbourhoods and
some will purchase smaller homes," added Soper. "In the meanwhile, we
will feel their absence in national sales statistics."
About the Royal LePage House Price Survey
The Royal LePage House Price Survey is the largest, most comprehensive
study of its kind in Canada, with information on seven types of housing
in over 250 neighbourhoods from coast to coast. This release
references an abbreviated version of the survey which highlights house
price trends for the three most common types of housing in Canada in 90
communities across the country. A complete database of past and
present surveys is available on the Royal LePage Web site at www.royallepage.ca. Current figures will be updated following the complete tabulation of
the data for the third quarter 2012. A printable version of the third
quarter 2012 survey will be available online on November 2, 2012.
Housing values in the Royal LePage House Price Survey are Royal LePage
opinions of fair market value in each location, based on local data and
market knowledge provided by Royal LePage residential real estate
About Royal LePage
Serving Canadians since 1913, Royal LePage is the country's leading
provider of services to real estate brokerages, with a network of
14,000 real estate professionals in over 600 locations nationwide.
Royal LePage is the only Canadian real estate company to have its own
charitable foundation, the Royal LePage Shelter Foundation, dedicated
to supporting women's & children's shelters and educational programs
aimed at ending domestic violence. Royal LePage is a Brookfield Real
Estate Services Inc. company, a TSX-listed corporation trading under
the symbol TSX:BRE.
For more information, visit www.royallepage.ca.
SOURCE: Royal LePage Real Estate Services