Home prices inch up in 2013, strong year ahead

The average price of a home in Canada increased between 1.2% and 3.8% in the fourth quarter of 2013, according to the Royal LePage House Price Survey and Market Survey Forecast.

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The survey showed year-over-year average price increases in the fourth quarter of 2013 of 3.6% to $418,282 for standard two-storey homes and 3.8% to $380,710 for detached bungalows, while the average price of a standard condominium rose 1.2% to $246,530.

Prices are expected to maintain healthy momentum into 2014, with Royal LePage projecting a 3.7% increase nationally from 2013 and a shift to a seller’s market in the first portion of the year.

“A few short months ago, the country’s housing market emerged from a year-long correctional cycle of dramatically slowed sales volumes. Later 2013 was marked by a transition to buoyant sales volumes and above average price growth,” said Phil Soper, president and chief executive of Royal LePage.

“In the absence of some calamitous event or material increase in mortgage financing costs, we expect this positive momentum to characterize 2014. In fact, we expect a market tipped decidedly in favour of sellers for the first half of the year, after which we project a shift to a more balanced market.

“We predict continued upward pressure on home prices as we move towards the all-important spring market. In addition to normal demand, housing prices in Canada this year will be influenced by buyers who put off purchase plans in the very soft spring of 2013,” continued Soper.

“Talk of a ‘soft landing’ for Canada’s real estate market in the new year is misguided. We expect no landing, no slowdown, and no correction in the near-term. Conditions are ripe for as strong a market as we saw in the post-recessionary rebound of the last decade.”

Canada’s economy is expected to perk up in the year ahead, supported by increased business spending, improving employment and wage prospects, and a pick-up in exports propelled by a recovering U.S. economy and a lower Canadian dollar, among other factors.

“We believe aggressive government intervention, such as further restrictions on first-time buyer’s access to insured mortgage financing, or significant increases in interest rates, is unlikely to occur in 2014,” said Soper. “Our forecast assumes a continuously improving economy, both at home and abroad.”

Regional Markets

Despite a swelling of inventory at year’s end, the Halifax housing market made strong gains in 2013. Standard two-storey homes saw the largest year-over-year gain, with the average price increasing 4.8% to $329,633. At the same time, condominiums increased 2.9% and detached bungalows increased 2.4%. Average Halifax house prices are forecast to increase by 1.1% in 2014.

St. John’s housing prices shot up again in the fourth quarter, with all three housing types experiencing 9.0% or greater year-over-year growth. An increase in the supply of homes available for sale in that market point to more moderate price appreciation in 2014.

The price for standard two-storey homes in Montreal increased markedly in the fourth quarter, increasing by 5.8% to $401,714. Other housing categories were more balanced, with detached bungalows rising by 2.9% and standard condominiums declining a modest 0.4%. Average housing prices in Montreal are forecast to increase by 1.4% in 2014, partially because of an expected decline in unit sales.

Prices for detached homes in Ottawa increased slightly on a year-over-year basis, with the average price for standard two-storey homes increasing 2.2% to $397,667 and detached bungalows increasing 2.4% to $395,167. Condominiums saw a slight depreciation in prices in reaction to a surge in available units. Average home prices in this region are expected to see mild growth of 1.6% in 2014.

A supply shortage of detached homes in Toronto led to steady increases in the average price for these types of properties, with standard two-storey homes increasing 2.7% to $686,250 and detached bungalows increasing 3.9% to $580,151. Over the same timeframe standard condominium prices were up slightly, increasing by 1.0% to $360,272. Toronto home prices are expected to grow by 3.9% in 2014, while unit sales are projected to increase by 0.9%.

The Winnipeg housing market witnessed mixed results in the fourth quarter, with condominiums experiencing a significant 7.2% year-over-year price increase based on a surge in demand for this housing type. Standard two-storey homes showed more modest growth, increasing 2.0%, while detached bungalows were down slightly with a 0.1% decrease. The average price of a home in Winnipeg is forecast to rise by 2.0% year-over-year in 2014.

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A surge in supply of homes available and prudent buyers in Regina led to modest price depreciation for detached homes in the area. Standard two-storey homes dropped 3.2% year-over-year to $370,250 while bungalows declined 0.5% to $331,500. At the same time standard condominiums posted a slight increase of 0.6%. The city’s residential real estate market is expected to bounce back in 2014, with average prices projected to increase by 2.5%.

The Calgary market saw strong year-over-year price appreciation across all housing types as inventory shortages continued. Average prices for detached bungalows increased 6.4% year-over-year to $468,967 and standard two-storey homes increased 6.1% to $461,089, while condominiums rose 7.0% to $269,778. With continued supply scarcity expected in the year ahead, average prices for homes are predicted to increase by 5.1%.

In the balanced Edmonton market, detached bungalows rose 3.7% year-over-year to $344,626 while standard two-storey homes posted a modest increase of 1.9% to $363,075. In the same period, condominiums increased by 2.2% to $207,270. Looking ahead to 2014, average house prices are expected to rise by 3.0%.

Confidence crept back into the Vancouver market, with prices for all housing types seeing moderate growth. The average price for detached bungalows increased 4.0% year-over-year to $1,041,300 and standard two-storey homes increased 3.3% to $1,139,050, while condominiums rose 2.3% to $492,500. The momentum of the real estate market is expected to carry over into the New Year, with prices projected to rise 4.4% in 2014.

2014 Royal LePage Market Survey Forecast

Average House Price % Change
Market	Province	2014/2013 % Change	2014 Forecast	2013	2013/2012 % Change	2012
Halifax	NS	1.1%	278,000	275,000	1.6%	270,742
Montreal	QC	1.4%	336,000	331,500	1.8%	325,655
Ottawa	ON	1.6%	365,252	359,500	2.0%	352,610
Toronto	ON	3.9%	545,000	524,500	5.1%	498,973
Winnipeg	MB	2.0%	271,800	266,500	4.5%	255,058
Regina	SA	2.5%	321,300	313,500	4.1%	301,145
Calgary	AB	5.1%	461,000	438,500	6.4%	412,315
Edmonton	AB	3.0%	355,000	344,500	3.0%	334,318
Vancouver	BC	4.4%	801,000	767,000	5.1%	730,063
National		3.7%	396,500	382,500	5.2%	363,740