Tag Archives: Price Increases

Strong market means house prices to rise in major cities, realtor says

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Canada’s housing market will continue to be strong this year, with rising property values expected in all major markets, real estate brokerage firm Royal LePage said Thursday.

The company’s forecast called for prices across to country to rise 2.8 per cent by the end of 2012, after stronger gains last year.

Even pricey housing markets in Metro Vancouver and Toronto – where standard two-storey homes averaged $1.1 million and $629,188, respectively, in the last quarter – will see continued price appreciation in 2012, though the gain for Metro will be more muted, according to the broker-age firm’s forecast.

Metro Vancouver is expected to see its average house price climb 2.3 per cent to $802,000 in 2012, while Toronto is expected to see a 2.6-per-cent jump.

“Widespread calls for a major real estate correction in 2012 simply can’t be justified,” Royal LePage CEO Phil Soper said in a statement.

“The industry has significant momentum entering the year, and buoyed by the stimulative effect of very low interest rates, we expect the market to continue to expand – albeit at a slower pace.”

However, Royal LePage said stronger gains will be seen in cities benefiting from commodity-based economies, such as Calgary, Regina and Winnipeg, where price gains will be in the range of four to five per cent.

According to the company, in the fourth quarter of 2011, the average price of a standard two-storey home in Canada was $375,427, up 4.2 per cent from a year earlier.

The average rate of a detached bungalow was up 6.1 per cent to $344,392, while condominiums gained 3.6 per cent to $234,680.

Statistics Canada reported Thursday that its new housing price index rose 0.3 per cent in November, following on a 0.2 per cent increase in October, and was up 2.5 per cent yearover-year.

Price increases in Toronto, Oshawa and Montreal offset declines in Calgary, Metro Vancouver and the Ontario metropolitan regions of Sudbury and Thunder Bay, the agency said.

In Vancouver, Statistics Canada said some builders offered promotional pricing in order to sell units, which helped push new-home prices 0.3 per cent in November from October, and made the

Builders in the other areas reported lowering prices in order to stimulate sales and remain competitive, while price increases elsewhere were attributed to higher material and labour costs.

The Canada Mortgage and Housing Corp. has forecast the average price of a listed homes for resale to be $363,900 this year, up 1.2 per cent from 2011. The Canadian Real Estate Association predicted that the aver-age price would be relatively flat at $362,700.

Both forecasts were made in November.

http://www.vancouversun.com/business/Strong+market+means+house+prices+rise+major+cities+realtor+says/5990636/story.html

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Winnipeg homebuyers have something to smile about

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The gods were smiling on Winnipeg homebuyers in the third quarter of this year, according to a new housing affordability report from RBC Economics.

The bank said Friday Manitoba saw some of the country’s biggest improvements in housing affordability during the quarter that ended Sept. 30.

Not only did mortgage rates decline from the second to third quarters, but selling prices also did an about-face, declining across the board after racking up some record-breaking gains in the second quarter.

The bank said the biggest retreat was in the price of a standard two-storey home, which declined by 2.4 per cent to $282,000. The average selling price of a detached bungalow fell by 1.6 per cent to $263,700, while the average price of a standard condominium dipped by 0.3 per cent to $157,700.

That news may come as a surprise to Winnipeggers who have grown accustomed to double-digit price increases for much of the last eight years.

But Peter Squire, residential market analyst for the WinnipegRealtors, said it’s not unusual for average selling prices to bounce around from month to month or quarter to quarter because of seasonal variations in the marketplace. He noted, for example, there tends to be more sales and more upward pressure on prices during the spring and summer than in the fall and winter.

But if you compare prices on a year-over-year basis, which is what the WR does in its monthly market reports, it shows the average selling price for a single-family, detached home in Winnipeg is still 7.4 per cent higher than it was in the third quarter of last year — $253,163 versus $235,822, he said.

Robert Hogue, senior economist for RBC Economics, said while selling prices are higher than they were a year ago, they’ve cooled a bit in recent months, and he expects them to remain fairly stable through to year-end.

Hogue said affordability in Manitoba remains near historic norms, “which is a telltale sign that home ownership in the province is reasonably achievable.”

RBC’s quarterly Housing Trends and Affordability report measures the affordability of housing in 13 Canadian markets by calculating the proportion of pre-tax household income needed to service the cost of owning a home at the going market value.

An affordability rating of 50 per cent means home ownership costs, including mortgage payments, utility bills and property taxes, take up 50 per cent of a typical household’s monthly pre-tax income. So the higher the rating, the more costly it is to afford a home.

The bank said Manitoba’s affordability rate declined in the third quarter for all three housing types. For bungalows, it fell 1.2 percentage points to 35.6 per cent; for two-storeys it dropped by 1.5 per cent to 37.9; and for condos it fell 0.5 per cent to 21.4.

Vancouver and Toronto had the two least affordable markets, with affordability ratings for a benchmark detached bungalow of 90.6 per cent and 52.1 per cent respectively. Other examples are 40.9 per cent for Montreal, 40.8 per cent for Ottawa, 37.6 per cent for Calgary and 33.2 per cent for Edmonton.

RBC said most of those markets also saw the affordability of bungalows improve from the second to third quarters. The lone exception was Calgary, which saw an erosion in affordability.

http://www.winnipegfreepress.com/business/winnipeg-homebuyers-have-something-to-smile-about-134525028.html

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Manitoba Land Transfer Tax (LTT) not a fee but a source of revenue?

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Based from the analysis made by the WinnipegREALTORS, the provincial government’s land transfer tax (LTT) has burdened home buyers since it was first implement in 1987. The amount of LTT a home buyer now pays has increased tenfold since the implementation of the tax. Take for example, if you purchased a house back in 1987 at $82,000 you have to pay $260 to the local government to settle the acquisition of the new title.

In 2011, if you bought a house amounting to $249,000, the land transfer tax required to be paid by the buyer is $2,630. You might as well say $2,700, as another $70 registration fee is required for registering the land title.

“It is to imagine that when they introduced the land transfer tax that they intended it to raise so much revenue, and not to remain similar to a user fee as it was at the beginning, ” said Claude Davis, chair of WinnipegREALTORS civic and legislative affairs committee.

One reason the LTT is so punitive is that the government has never indexed it to home price increases since the tax was first implemented in 1987. Instead, the government increased the tax percentage from 1.5 per cent to two per cent for any dollar amount over $200,000. As a result, for every $50,000 in property value above $200,000, the government collects an additional $1,000. This is why in 2010, despite MLS home sales being down in comparison to 2009, the provincial government took in an additional $3.6 million based on MLS home sales alone.

WinnipegREALTORS has already pointed out to the government that the land transfer tax is an impediment to housing affordability, especially for first time home buyers who do not have the benefit of any equity in a home.

Sales for entry levels homes in 2010 plummeted 35 per cent in comparison to 2009. While there is no way to attribute the decrease entirely to the LTT, as the highest rate two per cent does not kick in until after $200,000, any additional closing cost can be enough to prevent a first-time buyer from having the money needed to purchase a home.

Winnipeg’s current sellers’ market is well entrenched in part due to a lack of rental accommodations and strong immigration numbers. Anything the provincial government can do to loosen up badly needed rental units for newcomers would be welcomed. Freeing up occupied rental units by encouraging home ownership is one solution.

In British Columbia and Ontario, where unreasonably high land transfer taxes are also levied on home buyers, at least they recognize the difficult first’s time buyers experience and offer generous exemptions for this group. But there is no first time home buyer exemption in Manitoba.

The government has to keep in mind that even home sale in Manitoba generates economic activities of $40,000. The government also should appreciate that most buyers would use any savings they realize from relied on the land transfer tax back in their newly-purchased homes. Consider what economists are saying about this year’s MPI rebate: the best thing for the economy is for people to spend. That is clearly what most home buyers will given some relief.

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Canadian first time buyers rush to beat interest rate rises

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According to estate agents REMAX, nearly a third of the 19 major Canadian markets are reporting a larger number of sales than this time last year, and 70% say that average selling prices have increased. Prices in greater Vancouver have increased by as much as 20% this year with Hamilton Burlington showing an 8% increase year-on-year, and Winnipeg, Toronto and Québec city are all reporting price increases.

Much of this activity is thought to be due to first-time buyers anxious to take advantage of low interest rates and also because of the changes to mortgage lending for new homeowners that are stricter with shorter terms. In general the Canadian economy is well placed with consumer confidence rising and fears of a double dip recession receding, and the residential property market is preparing for a busy spring.

One factor that may hamper the market is the lack of affordable housing for first-time buyers and those on low incomes. This is leading planners and developers to change their criteria towards building smaller condo units and homes. This demand for reasonably priced property is expected to grow in coming years.

Even though home ownership rates are at nearly 70% there is still room for growth in the market and it seems unlikely that buyers will be deterred by the higher cost of lending and housing. Canadians still believe strongly in home ownership and don’t want to rent and pay someone else’s mortgage. This means that starter homes will become more and more necessary for first-time buyers.

http://www.property-abroad.com/canada/news-story/canadian-first-time-buyers-rush-to-beat-interest-rate-rises-19317049/

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What the future holds for Canadian real estate

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Everyone wishes they had a crystal ball, with a clear picture of the future. But homeowners and investors looking at the housing market numbers for clarity are looking in the wrong place.

That’s because the numbers (average price, housing starts, sales-to-listing ratios, etc.) are only a reflection of what has occurred in the past.

Smart homeowners, first-time buyers and investors ignore those stats and focus on the underlying economic fundamentals, and by doing so can quite accurately predict what will happen in their target region’s real estate market.

The “Canadian real estate market” does not exist

Canada is actually a series of regional markets, all of which perform relatively exclusive of each other.

In 2011, the market really will be a Goldilocks story: some markets will be too hot (compared to underlying economics), others will be too cold, and some will perform just right. As our regions continue to detach from each other economically, this trend will continue for many years to come and will compel investors and homeowners to ignore national real estate numbers and trends.

2011 predictions

Long-term increasing prices of real estate stem from economic (GDP) growth.

GDP growth = job growth = (12 months later) population growth = increased rental demand = decreased vacancies = increased rents = (18 months later) property purchase demand = increase in property prices

Sustainable real estate price increases occur approximately 18 months after a region’s economy begins to grow. This cycle works in reverse, too: prices drop approximately 18 months after the economy in a region begins to shrink.

(There can be upward and downward blips not attributed to economic growth, such as when governments enact new measures, but these are just short-term.)

Because Canada’s 2011 market is going to be even more regionally fractured than in 2010, it is imperative that investors and homeowners understand this formula and make their investment decisions based on it, rather than on fluctuating housing market numbers.

http://homeandgarden.homes-extra.ca/Homes/2011/04/18/18032566.html

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Home prices on course to hit record highs in 2010

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A rush to buy, sparked by expectations of higher mortgage rates and the pending harmonized sales tax in Ontario and British Columbia, is fuelling an ever sharper rebound in the real estate market.

Already an extraordinary turnaround story in the wake of the recession, new home construction is picking up and resale prices are now forecast to hit fresh records this year. In some areas, such as Vancouver, the country’s richest market, prices are now at the point where detached homes are out of reach for many home buyers – even with extremely low interest rates.

Home prices in Canada will surge to new highs this year, led by strength in the Western provinces and Quebec, says a new forecast by the Canadian Real Estate Association. The group sees average prices rising to $337,500, up more than 5 per cent from last year, while sales activity will also reach a record before cooling next year, the Canadian Real Estate Association (CREA) predicted Monday.

The projection is likely to raise the temperature on the debate over whether the recent price increases are sustainable, given that the Canadian economy is only just emerging from a sharp recession, job creation remains muted and interest rates are set to rise. Home prices in December were 19 per cent higher than they were a year earlier, a startling jump that has alarmed the country’s top bankers.

Some bankers have privately urged the government to cool the market by tightening the rules for mortgages.

While most economists believe activity will ease by the end of the year, the question is whether the market will land softly – or with a thud.

Feverish demand has taken even those in the sector by surprise.

Bill Szeto has worked in the real estate industry for 16 years and never seen such a dizzying rebound in the property market. In Vancouver, demand is being driven by people wanting to purchase before rates go up, by overseas buyers looking for an investment property, and by those who want to purchase before the HST affects the cost of new homes.

Add to that a number of sellers who have been holding off on listing their properties until after the Olympics, and the result is a big shortage of available homes, driving up prices, says Mr. Szeto, vice-president of Macdonald Realty in Vancouver.

“Our inventory has dropped dramatically from last year to half of what it was,” Mr. Szeto said. “Then, there’s this urgency right now to buy, and a lot of it comes down to affordability.”

CREA forecasts a price increase of 4.2 per cent in British Columbia this year. But it doesn’t expect the torrid pace of price increases in the first half of the year to last. And prices may even drop slightly next year, the group said.

One reason is that supply should loosen. Housing starts have risen for three months in a row, jumping 5.8 per cent to 186,300 units in January on a seasonally adjusted annual basis, Canada Mortgage and Housing Corp. said in a separate report Monday.

“We’re not in the bubble camp,” said Peter Norman, senior director of economic consulting at Altus Group, a real estate consulting firm. “It’s hard to get terribly excited about a strong sustained recovery in the housing market in a situation where the unemployment rate remains elevated nationally. It’s hard to imagine this strength is going to continue unabated.”

A double-dip in the housing market is possible and could lead to “some house-price declines,” Mr. Norman said.

Factors that typically drive home prices – such as population growth, income trends and economic activity – mean “we do think home prices at the moment are somewhat overvalued, and that raises the risk you’ll see some softening over the next several years,” said Bank of Nova Scotia senior economist Adrienne Warren.

CREA, for its part, warns that year-over-year comparisons right now are skewed because of such a sharp slump last year, and may make the numbers look hotter than they actually are.

“Temporary factors at play are turbo-charging year-over-year price comparisons … that will fade come the second half of the year,” CREA chief economist Gregory Klump said.

Both Finance Minister Jim Flaherty and Bank of Canada Governor Mark Carney have played down the notion of a housing bubble in Canada – though they, along with much of the country, are keeping a close eye on developments.

http://www.ctv.ca/generic/generated/static/business/article1460606.html

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Canada inflation up more than expected in November

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OTTAWA — Canadian consumer prices rose 1.0 percent November versus the same month a year before, a greater rise than economists had expected amid higher gasoline prices, Statistics Canada said Thursday.

Economists had forecast a rise of 0.8 percent in inflation, following an increase in October of 0.1 percent year over year.

“Prices at the pump are now exerting upward pressure on the Consumer Price Index after an extended period in which they were the main contributors to year-over-year declines in overall consumer prices,” said Statistics Canada.

In November, gasoline prices were 14.1 percent higher than they were in November 2008, following a 13.1 percent decline between October 2008 and October 2009, said the government agency.

Overall, energy prices rose 1.3 percent between November 2008 and November 2009, following a 12.7 percent decline the month before.
Except for shelter, all major components of the Consumer Price Index recorded price increases in November, lead by hikes in transportation costs, food and furniture prices, and the cost of household operations.
Consumers paid 7.8 percent more for car insurance, 2.1 percent more for milk and eggs, 5.4 percent more for fish and seafood and 2.7 percent more to dine out at a restaurant.

Books and tuition cost 1.8 percent more.

Home prices fell 2.1 percent while the interest portion of payments on outstanding mortgage debt fell 4.0 percent, following a 3.1 percent decrease in October.

However, homeowners paid 4.3 percent more in November for maintenance and repairs costs and property taxes.

http://www.google.com/hostednews/afp/article/ALeqM5hx-CQH6T5mj-ivSGwqTyn1J-RjKw

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Look Back – 2007 Property Evaluations Canada Wide

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Supported by booming energy sectors, Saskatchewan, Manitoba and
New Brunswick experience highest house price gains in Q4 2007 -

TORONTO : – Canada’s real estate market posted significant
gains in the fourth quarter of 2007 and showed little sign of the traditional
seasonal slowdown. Average house prices continued to increase in the fourth
quarter with many markets experiencing double-digit gains, according to a
House Price Survey report released today by Royal LePage Real Estate Services.
Of the housing types surveyed, detached bungalows increased to $337,555
(+11.6%), followed by standard two-storey properties, which rose to $399,738
(+11.3%), and standard condominiums, which increased in price to $240,395
(+11.7%), year-over-year.
“The fourth quarter 2007 was surprisingly strong, with unseasonably high
price increases and unwavering demand,” said Phil Soper, president and chief
executive, Royal LePage Real Estate Services. “The strength of the market was
apparent throughout the country, largely due to positive economic
fundamentals. The value and export-demand for our natural resources has
underpinned high employment rates, providing Canadians with confidence in the
future stability of their jobs and their local residential real estate
markets.”
Mirroring the pattern seen throughout most of 2007, it was the prairies
that continued to dominate in price appreciation, with markets such as Regina
and Saskatoon experiencing price increases as significant as 50 per cent.
While agriculture is still a significant contributor to the regional economy,
natural resources such as oil, gas, potash and uranium continued to drive
exceptional growth in the area.
Homeowners in Saskatchewan saw property prices appreciate at a much
higher rate than anywhere else in Canada, reflecting the relative
affordability of homes in the region, and a shortage in supply relative to the
booming demand for home ownership. The combination of a spike in the number of
available jobs, the reasonable cost of living, and the attractiveness of the
prairie lifestyle led to an unprecedented number of people searching for
homes.
In Winnipeg, demand outstripped supply, prompting significant price
increases. A sharp rise in new housing starts, high employment rates and
several capital investment projects all contributed to the province’s positive
economic outlook. The increase in jobs also elevated consumer confidence and
provided buyers with the ability to spend more on homes. Buyers entered the
market eager to purchase properties before anticipated price increases occur.
Throughout the fourth quarter, Vancouver’s population continued to surge,
as the city held great appeal for both investors and newcomers to Canada. The
availability of a variety of jobs associated with the 2010 Olympics helped
maintain the strength of Vancouver’s housing market, and continued to pressure
house prices upwards.
In Alberta, the year end saw strong demand for more reasonably priced
properties in resource rich Calgary and Edmonton; however, a surplus of
inventory tempered activity levels and provided buyers with a selection of
listings from which to choose. The rapid escalation of home prices in recent
years has moderated demand and supports the current trend towards balanced
conditions. This is in sharp contrast to the first quarter of 2007, when
average house price increases in excess of 50 per cent were the norm in
Edmonton.
The impact of the rise of Canada’s dollar to parity with the US dollar
was mitigated by the end of the fourth quarter, as the manufacturing sectors
in Ontario and Quebec continued to adjust to the dollar’s appreciation. Buyer
activity levels in Central Ontario and Quebec remained strong and steady
through the fourth quarter. In fact, Toronto displayed high levels of home
buying activity in the fourth quarter, despite the city’s rising house prices,
partly related to the introduction of a new land transfer tax that will be
implemented on January 1, 2008.
Within Atlantic Canada, Saint John reported the highest price gains in
the fourth quarter, and was among the country’s top five cities with the most
significant price appreciations. In Saint John, it was the energy sector -
which makes up more than half of the province’s total exports – that continued
to drive the city’s economic vitality, luring both Atlantic residents and
investors to the city’s real estate market. Despite a restructuring of the
Irving family’s business assets, discussions persist about the development of
a new $7 billion refinery in the Saint John area – a plan that would further
solidify the province’s reputation as the natural resource hub of eastern
Canada.
Added Soper: “As we move into the new year, activity levels are expected
to wane from the frantic pace that many regions of the country experienced in
2007; however, average prices are expected to continue to rise, albeit at a
much more moderate pace. Canadian buyers and sellers can expect healthy,
balanced conditions in 2008 – the best environment for a strong and
sustainable real estate market.”

<<
—————————————–
Detached Bungalows
————————————————————————-
Q4 2007 Q4 2006 Bungalow
Market Average Average % Change
————————————————————————-
Halifax $201,333 $188,667 6.7%
————————————————————————-
Charlottetown $152,000 $145,000 4.8%
————————————————————————-
Moncton $151,000 $147,100 2.7%
————————————————————————-
Fredericton $155,000 $153,000 1.3%
————————————————————————-
Saint John $196,500 $137,000 43.4%
————————————————————————-
St. John’s $157,667 $143,667 9.7%
————————————————————————-
Atlantic $168,917 $152,406 10.8%
————————————————————————-
Montreal $229,314 $217,500 5.4%
————————————————————————-
Ottawa $308,583 $292,250 5.6%
————————————————————————-
Toronto $413,375 $379,656 8.9%
————————————————————————-
Winnipeg $214,494 $177,616 20.8%
————————————————————————-
Regina $229,200 $150,375 52.4%
————————————————————————-
Saskatoon $292,500 $188,500 55.2%
————————————————————————-
Calgary $429,889 $408,833 5.2%
————————————————————————-
Edmonton $336,786 $298,571 12.8%
————————————————————————-
Vancouver $795,250 $707,500 12.4%
————————————————————————-
Victoria $425,000 $380,000 11.8%
————————————————————————-
National $337,555 $302,497 11.6%
————————————————————————-

—————————————–
Standard Two Storey
————————————————————————-
Q4 2007 Q4 2006 2 Storey
Market Average Average % Change
————————————————————————-
Halifax $231,667 $199,333 16.2%
————————————————————————-
Charlottetown $180,000 $175,000 2.9%
————————————————————————-
Moncton $135,000 $130,000 3.8%
————————————————————————-
Fredericton $197,000 $187,000 5.3%
————————————————————————-
Saint John $255,000 $203,300 25.4%
————————————————————————-
St. John’s $219,333 $196,667 11.5%
————————————————————————-
Atlantic $203,000 $181,883 11.6%
————————————————————————-
Montreal $342,491 $319,573 7.2%
————————————————————————-
Ottawa $306,500 $287,000 6.8%
————————————————————————-
Toronto $506,900 $469,545 8.0%
————————————————————————-
Winnipeg $237,571 $198,621 19.6%
————————————————————————-
Regina $199,000 $146,500 35.8%
————————————————————————-
Saskatoon $321,250 $205,000 56.7%
————————————————————————-
Calgary $461,811 $425,644 8.5%
————————————————————————-
Edmonton $370,000 $325,714 13.6%
————————————————————————-
Vancouver $895,000 $803,500 11.4%
————————————————————————-
Victoria $456,000 $417,000 9.4%
————————————————————————-
National $399,738 $359,213 11.3%
————————————————————————-

—————————————–
Standard Condominium
————————————————————————-
Q4 2007 Q4 2006 Condo
Market Average Average % Change
————————————————————————-
Halifax $148,500 $142,500 4.2%
————————————————————————-
Charlottetown $100,000 $ 98,000 2.0%
————————————————————————-
Moncton N/A N/A N/A
————————————————————————-
Fredericton $126,000 $126,500 -0.4%
————————————————————————-
Saint John N/A N/A N/A
————————————————————————-
St. John’s $165,000 $146,333 12.8%
————————————————————————-
Atlantic $134,875 $128,333 5.1%
————————————————————————-
Montreal $201,912 $191,179 5.6%
————————————————————————-
Ottawa $196,833 $182,750 7.7%
————————————————————————-
Toronto $280,505 $254,019 10.4%
————————————————————————-
Winnipeg $124,270 $103,460 20.1%
————————————————————————-
Regina $144,000 $ 96,500 49.2%
————————————————————————-
Saskatoon $205,000 $124,000 65.3%
————————————————————————-
Calgary $284,144 $259,400 9.5%
————————————————————————-
Edmonton $240,500 $212,500 13.2%
————————————————————————-
Vancouver $428,250 $386,000 10.9%
————————————————————————-
Victoria $292,000 $238,000 22.7%
————————————————————————-
National $240,395 $215,251 11.7%
————————————————————————-
>>

REGIONAL SUMMARIES

In the fourth quarter, Halifax experienced better than anticipated house
price appreciation, as sales figures and average house price increases
continued to paint a picture of a healthy and well balanced housing market.
Low levels of desirable properties in the popular Sackville, Dartmouth and
Bedford neighbourhoods left little room for price negotiation, as buyers who
attempted to go-in below asking were largely denied entry into the market.
Moncton’s economy continued to shine in the fourth quarter, leading to
average house price increases. High mineral tax revenues, a strong
service-oriented economy and the grand opening of Molson Canada’s new
$35-million brewing facility continue to attract more buyers to an already
tight housing market.
In Fredericton, the strong provincial economy, and economic impact of new
commercial construction and the opening of several big box retail outlets
drove consistent housing market activity in the fourth quarter.
Saint John is enjoying a streak of positive press, strong consumer
confidence and exceptional year-over-year house price growth – three factors
that have pressured house prices upwards across all housing types in the
fourth quarter. Supply in the area continues to meet demand; however, with the
increase in optimism related to growth in the Saint John area, this will only
last for a short while longer.
Charlottetown’s housing market saw moderate growth in the fourth quarter,
as demand for lower-maintenance properties led to modest year-over-year house
price increases. New office building developments being built in the city’s
core and a strong provincial economy have positively impacted the confidence
levels of many area residents.
In St. John’s, speculation over the bourgeoning natural resource economy
and a second drilling project outside the Hebron Ben Nevis continued to lure
buyers to the area. Several new businesses to the city, including two
Starbucks coffee houses and several big box retailers, suggest the city is
poised for sustained growth.
Strong demand for houses in Ottawa continued to fuel price increases in
the fourth quarter. An anticipated shift in demographics to take place within
the workforce over the next few years has many newcomers flocking to the city.
Montreal’s real estate market continued to fire on all cylinders during
the fourth quarter. The combination of the city’s high level of consumer
confidence, a resilient economy that is adjusting to the strength of the
Canadian dollar, and affordable interest rates have all led to strong buyer
demand, pressuring average house prices upwards.
Toronto’s real estate market shattered all previously held records for
unit sales in 2007. The momentum from the year’s first three quarters carried
over to the end of the year, as robust buyer activity pressured average house
prices upwards.
As the year came to an end, Winnipeg’s housing market continued to be
characterized by rising average house prices, as inventory levels were not
able to satisfy buyer demand. A sharp rise in new housing starts, high
employment rates and several capital investment projects all contributed to
the province’s positive economic outlook.
In Saskatoon, the combination of continued in-migration, tight inventory
and increased property demand led to significant house price increases – of at
least 50 per cent, year-over-year. Market activity in Regina echoed that of
Saskatoon, as all housing types surveyed experienced significant
year-over-year double-digit increases.
In Calgary, an increase in inventory during the beginning of the fourth
quarter led to more balanced market conditions, and prompted single-digit
average house price appreciation. The city has experienced a surge in buyers
moving to condominiums in the downtown core simply due to their proximity to
amenities and affordable prices.
Despite the dramatic increase in available inventory seen in the last
three months of 2007, double-digit price increases were noted in Edmonton
across all housing types surveyed. While demand is strong, the increased
supply has impacted the resale market and homes that are not priced
appropriately will take longer to sell.
A strong economy and a job market brimming with opportunity attracted an
influx of buyers to Vancouver in the fourth quarter. In 2007, Vancouver’s
population grew considerably and census reports maintain that large urban
centres, including Vancouver, continue to attract people. During the fourth
quarter of 2007, Victoria’s real estate market experienced strong and steady
activity, and recorded a rise in average house prices. The fourth quarter also
saw slightly lower inventory levels, and well-priced product in most
categories continued to be at a premium.

The Royal LePage Survey of Canadian House Prices 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 80 communities
across the country. A complete database of past and present surveys is
available on the Royal LePage Web site at www.royallepage.ca, and current
figures will be updated following the end of the fourth quarter. A printable
version of the fourth quarter 2007 survey will be available online on
February 15, 2008.
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.


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2008 GST Reduction Was Not Universally Praised

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“I came to this very store and promised Canadians that a new Conservative government would cut the GST from seven to six to five per cent and at midnight tonight we will deliver on that promise, three years ahead of schedule,” he said at a photo opportunity in a Mississauga store Monday.

Harper said this latest cut will result in an additional $6 billion in tax relief for Canadian consumers in 2008.

But NDP Leader Jack Layton said the GST announcement and other Conservative tax cuts will do little to increase wealth in Canada. In an end-of-year interview, Layton noted that the tax cuts could widen the gap between rich and poor, while the average family could see higher property taxes, post-secondary education fees and other bills.

“Those with the highest salaries – the millionaires, the big banks, the (profitable) corporations… The ones that don’t need the help – are going to get the most help; the oil and gas companies in the tar sands, continuing to get subsidies as well as a big boost from the corporate tax cuts,” Layton said.

Patti Croft, chief economist with the investment firm Phillips, Hager and North, said anyone making big-ticket purchases will benefit from the consumption tax reduction. But, she said: “In general most economists would prefer a cut in income taxes. It’s a more efficient way to reduce the tax burden. By cutting the GST, hopefully it causes Canadians to spend more.”

Ottawa realtor Duane Leon, however, predicted that even though the cut could shave thousands of dollars off the price of a newly built home, there would be little impact on the real estate market. Many builders have already announced that price increases in the thousands of dollars for new construction that will take effect early in the new year, he said, adding this will offset any benefits to buyers from the GST reduction.

The only buyers who will see an actual one per cent price drop in the purchase price of a newly built home are those who bought in 2007 and take possession in 2008, said Leon, an agent with RE/MAX Metro-City Realty. GST is not charged on resales of existing properties.

The director of the Canadian Taxpayers Federation, however, defended this second trim in the GST, saying it will save the average household between $150 and $200 annually.

“While some have criticized cutting the GST, it is a broad-based tax cut that puts $5 billion back in the pockets of over-taxed Canadians,” John Williamson said in a statement. Noting that this is the second GST cut that the Tories have made since July 1, 2006, he added: “This is good news particularly since $10 billion in the pockets of Canadian consumers is preferable to Ottawa hoarding the cash.”

The president of the Canadian Federation of Independent Business agreed.

“The one percentage point cut puts over $5 billion dollars back into the national economy, at a time when sales are traditionally sluggish in many sectors,” said Catherine Swift.

“Our members’ No. 1 priority is tax reduction of all kinds,” she said. “They want to see more money left in Canadians’ pockets.”

The Goods and Services Tax was introduced by the Conservatives in 1992. All 10 premiers opposed the tax, lobby groups railed against it and one poll showed 80 per cent of Canadians objected

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