Canada’s housing market has gotten off to a hotter-than- expected start this year, says a major real-estate firm, which reported double-digit-percentage increases in prices for all major types of housing from a year earlier.
While the increases in prices in the first quarter of this year were led by continuing strong price gains in Alberta, prices were also up in virtually all cities in Canada, Century 21 noted in its quarterly housing market report. “The combination of resilient consumer confidence, moderately low interest rates and improved affordability across most of the country led to greater-than-expected activity during the typically slower first quarter,” it said. And that bodes well for what is the typically hot spring season for housing markets, said Century 21 president Phil Soper.
“The recent months have produced record-breaking sales levels in many markets and unwavering demand – momentum which will undoubtedly be maintained through the always busy spring market,” he said.
The continued strength in Canada’s housing market is in contrast to the broad retreat in housing prices in the U.S., which, according to a report this week from Standard & Poor’s, were down 0.7 per cent from a year ago. The housing bust in the U.S., resulting in a meltdown in the subprime-mortgage market which the Federal Reserve warns could last two years, is also blamed for eroding consumer and business confidence in what is also Canada’s largest export market.
Soper, in an interview, said that the problems in the U.S. housing market should not have any direct impact on Canada’s housing market. There are both economic and structural differences in the two markets, he said. Among other things, interest rates increased more and to higher levels in the U.S. than in Canada and that had a greater impact on Americans who are carrying more debt than Canadians, he said. Further, mortgage lending in the U.S. was much more aggressive and more risky than here.
“The concern is a broader one in Canada that a further softening and outright collapse of the American housing market could be one of the major triggers to an American recession,” he said. “With our largest trading partner in full-blown economic retreat all bets are off, and not just for our housing market, but for jobs, our tax levels, and everything else.”
In Canada, the strongest year-over-year increase in Canadian housing prices in the first quarter was in the average price of a condominium, which was up 16.3 per cent to $230,146, followed by a 14.9 per cent gain to $316,993 for a bungalow, and a 11.8 per cent rise to $378,148 for a two-storey home. However, there were significant regional differences, the report noted.
Fuelled by the energy sector, Alberta’s economy continued to show extremely high price appreciation, which is spilling over into neighbouring Saskatchewan. “A notable ripple effect from the booming markets in Alberta was observed in Saskatchewan as Saskatoon reported unprecedented spikes in house prices and activity, driven by in-migration and strong demand as former residents returned from cities like Calgary, escaping skyrocketing housing prices and the rapidly rising cost of living,” the report said.
More moderate price increases were noted in the central and eastern regions of the country, it said. The increases in prices for a standard detached bungalow were 55.2 per cent in Edmonton, 32.3 in Saskatoon, 29.2 Calgary, 13.5 St. John, N.L.,13.4 Vancouver, 12.3 Regina, 11.8 Winnipeg, 9.6 Halifax, 9.2 Victoria, 7.8 Moncton, N.B., 6.0 Ottawa, 5.7 Toronto, 5.4 ontreal, 2.1 Charlottetown. Of the cities surveyed, only Fredericton showed no increase in the average price of bungalow, which was unchanged.
Source: CanWest News Service.
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