Slower price growth as real estate markets cool

The dramatic rise in Canadian housing prices experienced over the past two years is over, but average prices will still increase 3.5 per cent this year, according to Royal LePage Real Estate Services.

Thursday’s report from Royal LePage report followed the news Tuesday that average house prices in June fell compared with a year ago for the first time since early 1999, according to the Canadian Real Estate Association.

Royal LePage said the April-June quarter was “solid,” with higher prices in most of the country.

While prices are forecast to move higher, the country’s largest real estate company predicts the number of transactions this year will decline by 11.5 per cent to 461,000 units.

It attributed the slowdown to jitters among prospective buyers because of economic uncertainty, along with an easing of pent-up demand.

In the second quarter, the average price of detached bungalows rose by 5.6 per cent from a year earlier to $351,587. Two-storey properties increased 5.2 per cent to $418,943.

“After several years characterized by a persistent shortage of listings, home buyers have felt the pressure of bidding wars and take-it-or-leave-it counter offers ease during 2008,” stated Royal LePage president and CEO Phil Soper.

“Home sellers have had to come to grips with the longer time it is taking to sell properties, but can take comfort in a market that continues to support reasonable price increases.”

The survey of 17 cities across the country found lower prices in two major markets – Edmonton and Calgary.

In Edmonton, the average price for a bungalow dropped 14.5 per cent while an average Calgary two-storey dropped six per cent.

The greatest price increase was in Regina, which has seen home values surge as higher commodity prices have driven the regional economy.

In Regina, all types of housing saw higher prices, even though inventory of homes increased five-fold, the survey said.

Tuesday’s report from the Canadian Real Estate Association said the 0.4 per cent June price decline reflected a slowing economy and a pullback from the huge runup in prices in recent years in Alberta’s energy-powered housing market.