Strong local economies and population growth support buyer demand

TORONTO, April 3, 2008 – Canada’s real estate market stands on stable footing.  On average, healthy year-over-year house price gains were recorded during the first three months of 2008. While more modest price increases were observed when compared to previous quarters, the solid appreciations noted in the first quarter are largely due to the shared effects of resilient local economies, high immigration levels, and relatively low interest rates – all leading to enduring buyer demand, according to a House Price Survey report released today by Royal LePage Real Estate Services.

While almost all markets surveyed experienced price increases, it was the smaller cities, with relatively affordable housing and strong economies based on resource industries that emerged with the most significant gains. Thriving Saskatoon saw appreciation as high as 66 per cent, while areas in Newfoundland posted increases above 20 per cent for the first time since Royal LePage started tracking house prices.

Of the housing types surveyed, detached bungalows increased to $336,834 (+8.3 %), followed by standard two-storey properties, which rose to $400,647 (+7.1%), and standard condominiums, which increased in price to $240,423 (+6.9 %), year-over-year.

“Canada’s housing market remains on solid footing.  With the notable exception of a handful of small western cities, the country has returned to an environment characterized by moderate house price increases,” said Phil Soper, president and chief executive, Royal LePage Real Estate Services.  “These conditions are far more agreeable to those searching for a home, and are more sustainable in the long term than the sharp price increases recently experienced.”
Although slowing global economies have moderated the demand for Canada’s natural resources, export regions continue to enjoy stronger local real estate markets.  Atlantic Canada is characterized by strong growth, as healthy provincial economies and oil expansion projects lead to high in-migration levels.  In Saskatchewan, gold, diamond and uranium mining, along with prospering agriculture industries, have retained many would-be out-migrates, and the more moderate cost of living has also lured skilled workers from Alberta.  Winnipeg’s growing population and robust economy is supported by the farming industry and the rising prices of grain. 

Strong demand and rising house prices were also noted in cities not driven primarily by the natural resource sector.

Average house prices increased in Toronto and Montreal during the first quarter, while unit sales activity dipped from the same period last year.  While there was a decline in unit sales volumes, the current activity levels in both cities are amongst two of the best first quarters on record for Toronto and Montreal.

It is worth noting that record snowfall in Central Canada and Quebec left many city streets and sidewalks virtually inaccessible to potential homebuyers during the first quarter.  As a result, many sellers held off listing their homes, choosing to wait for more conducive weather for open houses and viewings.

Despite Alberta’s strong economy and continued buyer demand, house prices and market activity tempered from the frenetic pace that characterized the energy-fuelled province in the past few years.  As global oil prices continue to fluctuate, some area buyers have grown weary of a housing market that is closely tied to the oil and gas sector.  As a result, listing inventory and selling periods increased during the first quarter, while sales activity continued to normalize.

Helping fuel Canada’s housing market is its status as having the fastest population growth amongst the G-7 countries.  This is a stabilizing force within the Canadian housing market and is critical for price appreciation in the longer term.  Canada continues to attract a high number of skilled immigrants; while immigrants have typically gravitated to larger cities such as Vancouver, Montreal and Toronto, trends now illustrate that secondary cities requiring skilled workers are regarded as home to many newcomers.

In addition to steady population growth, the structure of Canada’s financial services industry, and the lending products they provide, has buffered the country from the credit issues that currently exist within the U.S. housing market.

Added Soper: “We know now that the Canadian real estate market has followed a markedly different path from that of the United States.  Our tiny subprime mortgage market has exposed us to very few of the pitfalls that have created the unfortunate chaos south of the border.  While Canada will not escape the negative impact of a troubled American economy, Canadians’ home equity should remain safe, as the market moves into a period of slow growth, but growth nonetheless.”


In Toronto, persistent buyer demand and limited inventory levels continued to pressure prices upward in the first quarter; however, activity levels were slightly down.  Record snowfall in Toronto left many city streets and sidewalks virtually inaccessible to potential homebuyers during the first quarter.  As a result, many sellers held off listing their homes, choosing to wait for more conducive weather for open houses and viewings. 

While Toronto’s real estate market performed a little slower than expected during the first quarter of 2008, it is likely to gain strength as it moves into the busy spring season.  Despite decreased overall activity, some of the city’s neighbourhoods still received significant buyer interest, often resulting in multiple offer situations for well-priced, well-situated homes. 

Housing values in the Royal LePage Survey are Royal LePage opinions of fair market value in each location, based on local data and market knowledge provided by Royal LePage residential real estate experts.  Historical data is available for some areas back to the early 1970s.


Detached Bungalows

Market Q1 2008 AverageQ1 2007 Average % Change

Standard Two Storey

Market Q1 2008 AverageQ1 2007 Average % Change

Standard Condominium

Market Q1 2008 AverageQ1 2007 Average% Change