Canada’s housing market is poised to moderate as 2010 unfolds, according to a Royal LePage House Price Survey.

The post-recession real estate recovery, which began in earnest in the third quarter of 2009, continued unabated in the first quarter of the year. While year-over-year unit sales volumes increased and prices appreciated across the country, a look back at the two year period that spanned the recession’s beginning and end shows that some cities have experienced a rollercoaster effect of declining and rising prices, while at the other extreme, home prices in some regions never stopped appreciating.

“The first quarter of 2010 continued where 2009 left off, with more Canadians enthusiastically participating in a rejuvenated residential real estate market,” said Phil Soper, president and chief executive, Royal LePage Real Estate Services. “One of the earliest sectors of the economy to return to growth after the difficult recessionary period, the housing sector has been a prime beneficiary of low borrowing costs and improving consumer confidence.”

House prices were up across all key housing types surveyed by Royal LePage, with the average price of a detached bungalow in Canada rising almost 11 per cent to $329,209 in the first quarter year-over-year, while standard two-storey homes rose 10.3 per cent to $365,141 and standard condominiums increased 10.9 per cent to $228,963.

While some analysts have described house price increases over the past 12 months as a national housing boom, an analysis of Royal LePage data from Q1 2008 through Q1 2010 shows three different patterns of house price trends in Canada’s major cities:

• a rollercoaster effect in which prices dropped sharply then rose dramatically to levels that exceed pre-recessionary prices (Toronto, Vancouver and Victoria);
• non-stop growth markets, which were generally resilient through the downturn with incremental price appreciation over a two-year period (Halifax, Ottawa, Regina, Saint John, St.John’s and Winnipeg); and
• level markets, where house prices have remained relatively unchanged (Calgary, Edmonton, Moncton and Montreal).

“National averages from our first quarter report are not particularly useful in painting a picture of the country’s neighbourhood real estate stories. House sale data from the past two year period shows tremendous variances in terms of how different cities reacted to the recession,” Soper said. “In Vancouver and Toronto, for instance, the dramatic unit sales fluctuations exhibit a significant degree of market irrationality: inordinately fearful when faced with poorer markets; and overly enthusiastic when the tables turned. Montreal is an example of a city where the market has been much more stable and homeowners there seem quite happy with the relatively slow pace of change.”

“Even in our most frenzied pockets of market activity, the inevitable rise in interest rates coupled with home price appreciation will rein in demand as affordability erodes. Expect house prices to continue to rise, but the rate of appreciation should ebb steadily, month by month, throughout the remainder of the year, as balance returns to the industry,” concluded Soper.

The Royal LePage survey found the average price of detached bungalows in Toronto climbed to $459,107 in the first quarter, up 13.3 per cent from a year ago.

Standard two-storey homes in Toronto were up 13.2 per cent, rising to $562,150 while condo prices rose a more moderate 10 per cent to $317,579.

In the Vancouver area, detached bungalows climbed an eye-popping 21.8 per cent to $906,045 while two-storey homes were up 19.2 per cent to $987,5000 and standard condos were up 15.7 per cent from early 2009, rising to $470,000.

In contrast, Mr. Soper described a Montreal as “an example of a city where the market has been much more stable and homeowners there seem quite happy with the relatively slow pace of change.”

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 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.

Royal LePage Q1 2010 House Price Survey (.PDF)

Royal LePage is part of the Brookfield group of companies that includes Brookfield Real Estate Services Fund (TSX:BRE.UN)

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