By Garry Marr, Financial Post, October 15, 2014 It might be hard to convince some Canadians the end of the housing boom is near based on new statistics from the Canadian Real Estate Association which show prices still rising.
But the growing consensus, even in the face of record valuations for homes in Canada’s three most expensive cities, is that prices will flatten out — a thesis even supported by one of Canada’s largest real estate companies.
Ottawa-based CREA said Wednesday that sales across the country were up 10.6% in September from a year ago, though down 1.6% from August. The average price of a home climbed 5.9% from a year ago to $408,795.
“Momentum going into the the fourth quarter is showing tentative signs of waning,” says Gregory Klump, chief economist with CREA, noting low interest rates continue to support increased prices in the country’s more expensive cities.
What concerns me is some buyers seems to have this view that prices can only go up
But even Calgary, Toronto and Vancouver are unlikely to see the same gains in 2015 and Canadians in general are going to have to get used to a new reality in the housing market, where price gains drop below long-term averages, says Royal LePage chief executive Phil Soper.
“To be clear, we expect home prices to continue to grow in the months ahead, but at a slower rate than we have seen in recent years,” he said. “I don’t see prices going negative. Over the last 60 years home prices have appreciated in this country on average 5%. We are going to have more and more markets below that.”
Buyers entering the market today could be in for a long period of no growth in the price of their home but Mr. Soper says that’s probably not something they’ll be worried about.
“Buyers seem to reach a point in their life cycle, whether age, marriage or money saved, where they want to buy a house and enter the market regardless,” he says.