House prices to dip, not crash: Royal LePage

Jul 7, 2010, House prices to dip, not crash: Royal LePage

Housing prices in Canada are slowing, but aren’t likely to crash, according to experts at Royal LePage.

After two busy quarters, an influx of homes for sale will pull average selling prices down in the second half of the year, the realtor found.

Today, a detached bungalow sells for roughly 9% more than it did 12 months ago at $331,868 on average. The cost of a two-storey home rose by nearly the same amount to $367,835, while condo prices jumped 7.3% to average $230,014.

But by the end of 2010, home price appreciation will fall to average 6.8% year-over-year, Royal LePage is forecasting.

“An expected increase in the supply of homes on the market will now bring stabilization in prices and in some cities we will see both prices and unit sales decline towards the end of the year,” said Phil Soper, president and chief executive, Royal LePage Real Estate Services.

“This should not be interpreted as a severe correction but rather a natural reaction to the market having peaked quite early this year.”

The early surge in activity can be attributed to a number of factors including, rising interest rates, tightening of mortgage lending rules and the introduction of the Harmonized Sales Tax in British Columbia and Ontario.

“Moving into the next six months, key economic indicators such as employment growth will continue to bolster consumer confidence and help to ensure a fundamentally healthy housing market,” Soper said.

“Home prices will remain flat or decline slightly in most cities, but will be more likely to hold their value or increase in energy-producing economies such as Alberta.”