Canada's Housing Market Off To A Solid Start In 2006

Homes trade hands in near record numbers

(Wednesday, April 05, 2006) - Canada's housing market started the year on a strong note as average house prices rose in all markets across the country, according to a first quarter report released today by Royal LePage Real Estate Services. An unusually mild winter helped boost demand as unit sales rose to near record levels in the quarter.

Of the national markets examined, the highest average price appreciation occurred in detached bungalows, which rose to $282,059 (+11.0%), followed by standard two-storey properties, which increased to $340,956 (+9.2%), and standard condominiums, which rose to $195,909 (+8.8%).

Although prices appreciated in all markets, the national averages conceal substantial regional variations among the provinces. Energy-rich western provinces remained the country's leaders in price increases with Alberta leading the charge, while the central and eastern provinces saw more modest growth despite robust demand.

Alberta's major markets were characterized by soaring demand and an acute shortage of available listings in the quarter as the rate of price growth in Calgary and Edmonton surged to over twice the national average. The province's sizzling job market attracted record in-migration, supporting high demand for housing and prompting multiple offer situations.

Markets in Central and Eastern Canada experienced robust demand in the quarter, with unit sales rising in Toronto, Ottawa and Montreal compared to the same period in 2005. However, higher inventory levels gradually shifted market conditions to more balanced territory in the quarter with appreciation rates moderating from those seen in 2005.

"The majority of the country's housing markets are experiencing solid but more modest growth, a trend that is expected to characterize the rest of 2006," said Phil Soper, president and chief executive officer, Royal LePage Real Estate Services. "However, while the rate of appreciation has begun to slow, there has been no corresponding decrease in the number of homes changing hands. In fact, a strong labour market and still attractive interest rates will ensure that demand for housing continues to be high, sustaining healthy market growth for some time."

Soper added: "Not surprisingly, the story in Alberta follows a very different plotline. Moderation is not a word drawn upon by real estate professionals working to bring order to their frenetic housing market. With a rapidly advancing economy fuelled by sixty dollar oil, the supply of homes for sale has not come close to meeting demand, and as a result, prices are marching upwards."

Victoria relinquished its position as the country's leader in price appreciations for the first time in five quarters. While price increases remained in the double digits, rising inventory levels in the city have finally begun to temper the rate of increases. Vancouver and Winnipeg also experienced significant price appreciation as strong economic fundamentals fuelled continued growth in both markets.

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