Unseasonably High Price Appreciation and Record-Breaking Activity Cap Canada’s Real Estate Market in 2007
Supported by booming energy sectors, Saskatchewan, Manitoba and New Brunswick experience highest house price gains in Q4 2007
TORONTO, January 8, 2008 – Canada’s real estate market posted significant gains in the fourth quarter of 2007 and showed little sign of the traditional seasonal slowdown. Average house prices continued to increase in the fourth quarter with many markets experiencing double-digit gains, according to a House Price Survey report released today by Royal LePage Real Estate Services.
Of the housing types surveyed, detached bungalows increased to $337,555 (+11.6 %), followed by standard two-storey properties, which rose to $399,738 (+11.3%), and standard condominiums, which increased in price to $240,395 (+11.7 %), year-over-year.
“The fourth quarter 2007 was surprisingly strong, with unseasonably high price increases and unwavering demand,” said Phil Soper, president and chief executive, Royal LePage Real Estate Services. “The strength of the market was apparent throughout the country, largely due to positive economic fundamentals. The value and export-demand for our natural resources has underpinned high employment rates, providing Canadians with confidence in the future stability of their jobs and their local residential real estate markets.”
Mirroring the pattern seen throughout most of 2007, it was the prairies that continued to dominate in price appreciation, with markets such as Regina and Saskatoon experiencing price increases as significant as 50 per cent. While agriculture is still a significant contributor to the regional economy, natural resources such as oil, gas, potash and uranium continued to drive exceptional growth in the area.
Homeowners in Saskatchewan saw property prices appreciate at a much higher rate than anywhere else in Canada, reflecting the relative affordability of homes in the region, and a shortage in supply relative to the booming demand for home ownership. The combination of a spike in the number of available jobs, the reasonable cost of living, and the attractiveness of the prairie lifestyle led to an unprecedented number of people searching for homes.
In Winnipeg, demand outstripped supply, prompting significant price increases. A sharp rise in new housing starts, high employment rates and several capital investment projects all contributed to the province’s positive economic outlook. The increase in jobs also elevated consumer confidence and provided buyers with the ability to spend more on homes. Buyers entered the market eager to purchase properties before anticipated price increases occur.
Throughout the fourth quarter, Vancouver’s population continued to surge, as the city held great appeal for both investors and newcomers to Canada. The availability of a variety of jobs associated with the 2010 Olympics helped maintain the strength of Vancouver’s housing market, and continued to pressure house prices upwards.
In Alberta, the year end saw strong demand for more reasonably priced properties in resource rich Calgary and Edmonton; however, a surplus of inventory tempered activity levels and provided buyers with a selection of listings from which to choose. The rapid escalation of home prices in recent years has moderated demand and supports the current trend towards balanced conditions. This is in sharp contrast to the first quarter of 2007, when average house price increases in excess of 50 per cent were the norm in Edmonton.
The impact of the rise of Canada’s dollar to parity with the US dollar was mitigated by the end of the fourth quarter, as the manufacturing sectors in Ontario and Quebec continued to adjust to the dollar’s appreciation. Buyer activity levels in Central Ontario and Quebec remained strong and steady through the fourth quarter. In fact, Toronto displayed high levels of home buying activity in the fourth quarter, despite the city’s rising house prices, partly related to the introduction of a new land transfer tax that will be implemented on January 1, 2008.
Within Atlantic Canada, Saint John reported the highest price gains in the fourth quarter, and was among the country’s top five cities with the most significant price appreciations. In Saint John, it was the energy sector – which makes up more than half of the province’s total exports – that continued to drive the city’s economic vitality, luring both Atlantic residents and investors to the city’s real estate market. Despite a restructuring of the Irving family’s business assets, discussions persist about the development of a new $7 billion refinery in the Saint John area – a plan that would further solidify the province’s reputation as the natural resource hub of eastern Canada.
Added Soper: “As we move into the new year, activity levels are expected to wane from the frantic pace that many regions of the country experienced in 2007; however, average prices are expected to continue to rise, albeit at a much more moderate pace. Canadian buyers and sellers can expect healthy, balanced conditions in 2008 – the best environment for a strong and sustainable real estate market.”
REGIONAL SUMMARIES
In the fourth quarter, Halifax experienced better than anticipated house price appreciation, as sales figures and average house price increases continued to paint a picture of a healthy and well balanced housing market. Low levels of desirable properties in the popular Sackville, Dartmouth and Bedford neighbourhoods left little room for price negotiation, as buyers who attempted to go-in below asking were largely denied entry into the market.
Moncton’s economy continued to shine in the fourth quarter, leading to average house price increases. High mineral tax revenues, a strong service-oriented economy and the grand opening of Molson Canada’s new $35-million brewing facility continue to attract more buyers to an already tight housing market.
In Fredericton, the strong provincial economy, and economic impact of new commercial construction and the opening of several big box retail outlets drove consistent housing market activity in the fourth quarter.
Saint John is enjoying a streak of positive press, strong consumer confidence and exceptional year-over-year house price growth – three factors that have pressured house prices upwards across all housing types in the fourth quarter. Supply in the area continues to meet demand; however, with the increase in optimism related to growth in the Saint John area, this will only last for a short while longer.
Charlottetown’s housing market saw moderate growth in the fourth quarter, as demand for lower-maintenance properties led to modest year-over-year house price increases. New office building developments being built in the city’s core and a strong provincial economy have positively impacted the confidence levels of many area residents.
In St. John’s, speculation over the bourgeoning natural resource economy and a second drilling project outside the Hebron Ben Nevis continued to lure buyers to the area. Several new businesses to the city, including two Starbucks coffee houses and several big box retailers, suggest the city is poised for sustained growth.
Strong demand for houses in Ottawa continued to fuel price increases in the fourth quarter. An anticipated shift in demographics to take place within the workforce over the next few years has many newcomers flocking to the city.
Montreal’s real estate market continued to fire on all cylinders during the fourth quarter. The combination of the city’s high level of consumer confidence, a resilient economy that is adjusting to the strength of the Canadian dollar, and affordable interest rates have all led to strong buyer demand, pressuring average house prices upwards.
Toronto’s real estate market shattered all previously held records for unit sales in 2007. The momentum from the year’s first three quarters carried over to the end of the year, as robust buyer activity pressured average house prices upwards.
As the year came to an end, Winnipeg’s housing market continued to be characterized by rising average house prices, as inventory levels were not able to satisfy buyer demand. A sharp rise in new housing starts, high employment rates and several capital investment projects all contributed to the province’s positive economic outlook.
In Saskatoon, the combination of continued in-migration, tight inventory and increased property demand led to significant house price increases – of at least 50 per cent, year-over-year. Market activity in Regina echoed that of Saskatoon, as all housing types surveyed experienced significant year-over-year double-digit increases.
In Calgary, an increase in inventory during the beginning of the fourth quarter led to more balanced market conditions, and prompted single-digit average house price appreciation. The city has experienced a surge in buyers moving to condominiums in the downtown core simply due to their proximity to amenities and affordable prices.
Despite the dramatic increase in available inventory seen in the last three months of 2007, double-digit price increases were noted in Edmonton across all housing types surveyed. While demand is strong, the increased supply has impacted the resale market and homes that are not priced appropriately will take longer to sell.
A strong economy and a job market brimming with opportunity attracted an influx of buyers to Vancouver in the fourth quarter. In 2007, Vancouver’s population grew considerably and census reports maintain that large urban centres, including Vancouver, continue to attract people. During the fourth quarter of 2007, Victoria’s real estate market experienced strong and steady activity, and recorded a rise in average house prices. The fourth quarter also saw slightly lower inventory levels, and well-priced product in most categories continued to be at a premium.
The Royal LePage Survey of Canadian House Prices 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 80 communities across the country. A complete database of past and present surveys is available on the Royal LePage Web site at www.royallepage.ca, and current figures will be updated following the end of the fourth quarter. A printable version of the fourth quarter 2007 survey will be available online on February 15, 2008.
Housing values in the Royal LePage 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 experts. Historical data is available for some areas back to the early 1970s.
For the regional market highlights or to contact a spokesperson, please contact:
Selena Fiacco
National Communications & Public Relations Manager
416.510.5699
selenafiacco@royallepage.ca
