Stage is set for stronger than expected housing market
(NC)—According to a survey conducted by Royal LePage Real Estate Services and released in January, Canadians could see the average price of homes rise over the coming year. A strengthening economic recovery and low interest rates are behind the company's forecast. At the same time, the prospect of rising mortgage rates may prompt heightened buyer activity early in the year.
Trends in the housing market continue to be driven by the lingering after—effects of the recession,” said Phil Soper, president and chief executive of Royal LePage Real Estate Services. “Canadians realize that interest rates are unsustainably low and that homes will become effectively more expensive when mortgage rates return to normal levels. We will likely see more price appreciation early in 2011 as some buyers complete transactions in advance of anticipated higher borrowing costs.”
Soper added, “2011 is expected to unfold much like 2010, when close to 60 per cent of sales volume occurred in the first half of the year in anticipation of interest rate increases that never materialized. However, housing market activity in the first half of 2011 will be modestly closer to the norm, as last year's phenomenon was exacerbated by mid—year tightening of mortgage accessibility and the introduction of HST in Ontario and British Columbia.”
Regionally, the strongest price appreciation of the cities studied is expected in mid—sized urban centres where affordability is better than the national average. For example, in Winnipeg, St. John's and Fredericton, two—storey homes below $300,000 are still widely available. Demand in these cities is expected to be strong, putting upward pressure on home values.
Across Canada, the average price of a home is forecast to rise 3 per cent over the coming year to $348,600 while the number of transactions is expected to drop 2 per cent.
Full results from the Royal LePage House Price Survey and Market Forecast can be found at www.royallepage.ca.