Royal LePage Foresees
National Home Prices Declining Three Percent This Year
January 6, 2009 - THE CANADIAN PRESS
TORONTO - The average price of a house in Canada is likely to decline by three per cent this year, according to Royal LePage Real Estate Services (TSX:BRE.UN). The number of residential resale transactions is forecast to decline 3.5 per cent nationally, though the country's largest realty operator expects that there will still be local warm spots.
The forecast issued today follows a "significant reset" in 2008 - which Royal LePage predicted a year ago would see a 3.5 per cent average increase across the country.
In the event, preliminary numbers show a 1.1 per cent decline for 2008. Royal LePage says this came as "emotional reaction to recent economic and political instability did much to dampen consumer confidence during the latter part of 2008, causing a marked slowdown in house sales activity."
However, it predicts that "a more rational understanding of the issues" along with government corrective measures will cause activity to pick up in the latter half of 2009.
Overall, Royal LePage sees "only modest price and unit sales corrections." Nationally, the average house price is forecast to dip to $295,000, off from $304,000 in 2008, which in turn was down from $307,265 in the peak year of 2007.
"While Canada's housing market is anticipated to continue to move through a period of adjustment over the next six months, we should expect modestly lower home prices, not a U.S.-style collapse, which was brought on by a structural failure of the entire American credit system," stated Royal LePage CEO Phil Soper. "Most consumers are not aware that nationally, Canadian housing market activity peaked in 2007 and has been adjusting lower since. We are well into this inevitable cyclical correction."
In spite of the cooling trend on a national level, price and activity gains are still anticipated in some provinces, the Royal LePage report added. In mid-sized cities where prices remain below the national average, such as Regina and Winnipeg, prices are expected to increase moderately. Meanwhile, the steepest decline is forecast for Canada's most expensive city, Vancouver - "a natural cyclical reaction to an extended period of high price appreciation."