The average price of a home in Canada increased between 3.6% and 6.1% in the fourth quarter of 2011, compared to the previous year, according to the latest data from the Royal LePage House Price Survey and Market Survey Forecast. Royal LePage expects average price growth to continue through 2012 and predicts national average prices to increase by 2.8% by the end of the year.
Despite calls in some quarters for Canadian house prices to soften in 2011, the market proved resilient as demand created by low interest rates and a relatively stable national economy created upward pricing pressure for all housing types surveyed. Furthermore, recent high profile reports forecasting significant house price declines in 2012 are not supportable. Nationally, consumer confidence in the housing market was high in the fourth quarter as real estate brokers witnessed an unusually high quantity of multiple offer situations, including over the holiday season, compared to the same period in previous years.
In the fourth quarter, standard two-story homes rose 4.2% year-over-year to C$375,427, while stand-alone single-story homes saw their average prices increase 6.1% to C$344,392. Average prices for standard condominiums increased 3.6% to C$234,680.
In Canada's major metropolitan markets, Vancouver continued to experience some of the largest year-over-year price increases, ranging from the standard condominiums rising 10.7% to single-story stand-alone homes rising in price 14.1%. At the end of 2012, average house prices in Vancouver are forecast to be 2.3% higher than 2011. In Toronto, a lack of inventory produced strong year-over-year price appreciation in 2011, with average price gains ranging from 3.4% to 7.2% for the housing types surveyed. Average house prices in Toronto are forecast to increase 2.6% over 2011.
‘In the recovery period following the 2008-2009 recession, I found myself repeatedly speaking of 'irrational exuberance' in the Canadian housing market,’ says Phil Soper, president and CEO of Royal LePage Real Estate Services. ‘Expectations were too high and the pace of expansion unsupportable. With this report, I find myself in exactly the opposite position. Widespread calls for a major real estate correction in 2012 simply can't be justified. The industry has significant momentum entering the year, and buoyed by the stimulative effect of very low interest rates, we expect the market to continue to expand – albeit at a slower pace.’