The Royal LePage House Price Survey released in 2013 showed that house prices remained relatively flat in the first quarter of the year, compared to the first quarter of 2012. The survey reported that the average price of a home in Canada increased between 1.2 per cent and 2.4 per cent. An unprecedented combination of flat or in some regions decreasing house prices, inexpensive mortgages, and the confidence brought on by an improving economy has resulted in a unique residential real estate environment.
In the first quarter of the year, the national average price of a standard two-storey home increased 2.2 per cent, compared to the previous year. Over the same period, the national average price of a detached bungalow increased 2.4 per cent and the average price of a standard condominium increased 1.2 per cent.
For Ottawa in particular, the real estate market remained relatively flat, with house price gains ranging from 0.8 to 1.9 per cent. While standard condominiums saw the largest price gains, unit inventory for this housing category shot up 41 per cent compared to last year.
“2013 finds the Canadian housing industry in a highly unusual place. The combination of very low mortgage rates and flat home prices, against a background of general economic improvement across the nation, is not something we’ve seen before,” said Phil Soper, president and chief executive of Royal LePage. “Typically one of these variables is moving hard in an opposite direction. While some have spoken loudly about impending market volatility and dramatic downward pressure on home prices, we are simply not seeing evidence of this. The current environment is very supportive for housing. Those waiting for big declines in home prices will likely be disappointed.”
The Canadian economy stabilized during the first quarter of 2013 and the country surpassed expectations with the addition of 51,000 jobs1 during the month of February. Domestic economic strength is buttressed by an improving U.S. economy and the expectations of a growth in resource consumption driven by China. At the same time, despite the improving economy, the Bank of Canada has been clear about its intention to keep interest rates low for the near- and mid-term.
1Source: Statistics Canada, Labour Force Survey, February 2013.
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“There is some degree of uncertainty regarding the of length time these factors will remain in place,” said Soper. “Of the three variables we identified, economic strength is the most likely to persist based upon the upswing in employment, our well-educated workforce, a solid financial sector and the influence of our natural resource sector. Given recent and repeated signals from the Bank of Canada, we can expect interest rates to remain low for some time to come. The continued stability of house prices is much harder to gauge.”
Royal LePage’s quarterly House Price Survey shows the annual change of prices for key housing segments in select national markets. 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.
For more information, or to view the quarterly Price Survey, please visit the royallepage.ca website.
