Disequilibrium of the supply and demand of detached homes pushes prices
upward
TORONTO, Jan. 9, 2014 /CNW/ - The Royal LePage House Price Survey and
Market Survey Forecast released today showed modest year-over-year
growth in prices for all housing types surveyed in Toronto.
Standard two-storey homes saw an increase of 2.7 per cent to $686,250,
while detached bungalows increased 3.9 per cent to $580,151. Over the
same timeframe standard condominium prices remained relatively flat,
increasing by 1.0 per cent to $360,272.
"The upward pressure on detached homes reflects the intense demand for
these properties combined with a dwindling supply of homes with a
backyard and decent lot size within the city," said Gino Romanese,
Senior Vice President, Royal LePage. "Good detached properties,
particularly bungalows, are a vanishing breed in Toronto. As the city
continues to become denser and the availability of these properties is
further constrained, it is likely that we'll see further price
appreciation in these types of properties."
According to Romanese other than in-fill redevelopment projects or
narrow lot configurations, chances of building a bungalow or a standard
two-storey home in Toronto are becoming remote.
Romanese noted that the Toronto condo market has largely defied the "sky
is falling" predictions, as there was slight year-over-year price
appreciation in this segment. "The one per cent increase in average
price of Toronto condos reflects a good balance of supply and demand in
this market."
Looking ahead to 2014, Royal LePage forecasts that prices will rise by
3.9 per cent in the Toronto market, while unit sales will increase by
0.9 per cent.
"While home prices will appreciate in the broader Toronto market, one
area where price increases are expected to be smaller is at the higher
end of the standard two-storey market, where some houses are nearing
the $1 million mark. This is not only a psychological threshold but
also the amount where financing becomes more difficult," explained
Romanese.
"Interest rates should continue to be low, allowing for a healthy spring
market. For the year ahead, employment levels in Toronto and the status
of the recovery in the U.S. could also have an influence on the
Canadian economy, and by extension the residential real estate market,
so we will be monitoring both," added Romanese.
Nationally, the average price of a home in Canada increased between 1.2
per cent and 3.8 per cent in the fourth quarter.
The survey showed year-over-year average price increases in the fourth
quarter of 2013 of 3.6 per cent to $418,282 for standard two-storey
homes and 3.8 per cent to $380,710 for detached bungalows, while the
average price of a standard condominium rose 1.2 per cent to $246,530.
Prices are expected to maintain healthy momentum into 2014, with Royal
LePage projecting a 3.7 per cent increase nationally from 2013 and a
shift to a seller's market in the first portion of the year in a number
of regions.
"A few short months ago, the country's housing market emerged from a
year-long correctional cycle of dramatically slowed sales volumes.
Later 2013 was marked by a transition to buoyant sales volumes and
above average price growth," said Phil Soper, president and chief
executive of Royal LePage. "In the absence of some calamitous event or
material increase in mortgage financing costs, we expect this positive
momentum to characterize 2014. In fact, we expect a market tipped
decidedly in favour of sellers for the first half of the year, after
which we project a shift to a more balanced market."
"We predict continued upward pressure on home prices as we move towards
the all-important spring market. In addition to normal demand, housing
prices in Canada this year will be influenced by buyers who put off
purchase plans in the very soft spring of 2013," continued Soper. "Talk
of a 'soft landing' for Canada's real estate market in the new year is
misguided. We expect no landing, no slowdown, and no correction in the
near-term. Conditions are ripe for as strong a market as we saw in the
post-recessionary rebound of the last decade."
About the Royal LePage House Price Survey
The Royal LePage House Price Survey is the largest, most comprehensive
study of its kind in Canada, with information on seven types of housing
in over 250 neighbourhoods from coast to coast. This release references
an abbreviated version of the survey which highlights house price
trends for the three most common types of housing in Canada in 90
communities across the country. A complete database of past and present
surveys is available on the Royal LePage website at www.royallepage.ca. Current figures will be updated following the complete tabulation of
the data for the fourth quarter of 2013. A printable version of the
fourth quarter 2013 survey will be available online on February 6,
2014. Housing values in the Royal LePage House Price 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.
About Royal LePage
Serving Canadians since 1913, Royal LePage is the country's leading
provider of services to real estate brokerages, with a network of
nearly 15,000 real estate professionals in over 600 locations
nationwide. Royal LePage is the only Canadian real estate company to
have its own charitable foundation, the Royal LePage Shelter
Foundation, dedicated to supporting women's and children's shelters and
educational programs aimed at ending domestic violence. Royal LePage is
a Brookfield Real Estate Services Inc. company, a TSX-listed
corporation trading under the symbol TSX:BRE.
For more information, visit www.royallepage.ca.
SOURCE Royal LePage Real Estate Services
