Housing market has peaked, says Royal LePage- The Toronto Star

An article by Hugh McKenna regarding the current housing market:

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Canada’s hot housing market appears to be at its near-term peak, with current high prices concealing early signs of moderating market, according to a new survey released Thursday by Royal LePage.
In its House Price Survey and Market Survey Forecast, Royal LePage says Canada’s residential real estate market saw sizable year-over-year price increases in the second quarter.
And, it says the price increases were evident across all housing types surveyed, with the national average price of a detached bungalow has rising the most — 7.5 per cent year-over-year to $356,625.
Meanwhile, the price of a standard two-storey home rose 6.1 per cent to $390,163 and the price of a standard condominium 3.5 per cent to $238,064.
While prices continue their recent climb, Royal LePage said signs of moderation, although they vary from region to region, are beginning to become apparent and the average price of a home is expected to end the year 7.7 per cent higher than at the end of 2010.
Sales volume nationally is forecast to decrease marginally by 2.0 per cent over the same period.
The survey, described by Royal LePage as the largest, most comprehensive study of its kind in Canada, contains information on seven types of housing in over 250 neighbourhoods from coast to coast.
“In many of Canada’s regional markets, we saw house prices appreciate at a significantly faster rate than wages and salaries, and this trend cannot continue indefinitely,” said Phil Soper, president and chief executive, Royal LePage Real Estate Services.
“We expect price gains to moderate considerably in the latter half of 2011, which should reduce the stress associated with purchasing a new home.”

                   Construction crews work at a housing development near 

Derry Rd. E. and Thompson Rd. in Milton, Ont. 

PAWEL DWULIT/TORONTO STAR

However, Soper noted that Vancouver and specifically certain neighbourhoods in the lower mainland of British Columbia, “remains an anomaly, as investment from outside of the country continues to support higher price levels.”
Year-over-year prices should appreciate modestly in 2011’s third quarter as most Canadian housing markets cooled during the same period in 2010. Similarly, this year’s final quarter should display a flat year-over-year price performance when compared to an unusually strong fourth quarter of 2010.
“While the global economy struggles to find its footing, here in Canada we are seeing indicators of a return to long-term norms,” noted Soper.
“There is an expectation of continuing improvement in employment levels across the country and accompanying strength in wages and salaries, which should provide support for the housing market. Looking ahead to 2012, signs are pointing to stability for Canadian home owners and new buyers. We believe we are past the period of peak house price appreciation.”
In the Atlantic provinces, Royal LePage says markets that had recently enjoyed unusually high price appreciation such as Halifax and St. John’s are still seeing gains, although smaller than those in recent quarters. At the end of 2011, average house prices in Halifax are forecast to be 3.3 per cent higher than 2010.
In Montreal, detached bungalows and two-storey houses posted strong year-over-year gains above seven per cent in the second quarter, while standard condominiums rose modestly by 1.9 per cent. At the end of 2011, average house prices in Montreal are forecast to be seven per cent higher than 2010.
Toronto’s seller’s market witnessed strong year-over-year price appreciation in the quarter, with price gains ranging from 4.7 per cent to 6.1 per cent as the average price of a detached bungalow hit $511,100 and a standard two-storey homes $617,774.
The average year-over-year house price in Toronto is expected to see an overall increase of 6.4 per cent in 2011, while unit sales are expected to decrease 1.8 per cent largely due to lack of inventory.
Regina saw the largest year-over-year gain in the quarter, with the price of a standard two-storey home jumping 15.6 per cent and detached bungalows posting an 11 per cent gain as the city’s limited inventory was unable to keep up with the demand created by the booming local job market. At the end of 2011, average house prices in Regina are forecast to be 12.4 per cent higher than 2010.
Calgary witnessed moderate year-over-year price declines as it continued to adjust from the boom experienced in the middle of the previous decade, but is expected to finish the year with an average price gain of 3.8 per cent.
Vancouver experienced some of Canada’s largest year-over-year price increases with detached bungalows rising 14.1 per cent and standard two-storey homes rising 12.0 per cent. Average prices for standard condominiums stabilized rising 2.5 per cent.
At the end of 2011, average house prices in Vancouver are forecast to be 15.4 per cent higher than 2010.
Elsewhere, Ottawa is expected to see average prices finish 2011 up five per cent compared with 2010 and Winnipeg up six per cent, while prices in Edmonton are expected to be down 1.2 per cent.