Home prices set record as West drives market
Globe and Mail
By David George-Cosh
May 29, 2007
Canada’s housing market has continued to escape the downturn unfolding in the U.S., with the average resale price of a home climbing above the $300,000 mark for the first time in April.
Average prices, sales values and listings all set fresh records last month, and regional disparity continued to be the story with most of the frenzy taking place in provinces west of Ontario, according to the Canadian Real Estate Association.
Of all the western provinces, nowhere is as hot as Saskatchewan.
The province experienced almost 100-per-cent growth in dollar volume since the previous year and, according to Rob Nisbett, co-worker of Re/Max in Regina, residents sign up to be placed on an 18-month waiting list to purchase a new home.
“It’s quite incredible,” Mr. Nisbett said. “Business is magnificent.
“We do not have enough product to keep up with demand. I’ve never seen anything like this since I’ve been in this business almost 25 years ago,” Mr. Nisbett said.
Saskatchewan also saw the largest percentage increase in annual unit sales and new listings of all provinces.
“Saskatoon has been a stable market but has exploded in recent months,” said Gregory Klump, CREA’s chief economist. “After having moved to Alberta where the cost of living is more dear, people are moving back and buying homes.”
The average price of a resale home in Canada jumped 9.3 per cent in April from a year to $305,542, the report said.
British Columbia remains the most expensive province in which to purchase a home, with the average resale price at $431,909, while Prince Edward Island is the cheapest at $135,019.
The prairie provinces and B.C. were the only regions of the country that saw double-digit price growth. Year-to-date transactions also set a new record in April.
“Over all, the housing market remains remarkably healthy, “said Douglas Porter, deputy chief economist at BMO Nesbitt Burns Inc. “Given the dire straits of the U.S. market, it puts the Canadian numbers in particular stark relief.”
Canada’s real estate market continues to boom amid low mortgage rates and a historically low unemployment rate. It’s a different story south of the border, with mortgage defaults rising alongside diminishing sales, home prices and builders’ profits.
Seasonally adjusted home sales in Canada’s major market rose 1.5 per cent to 43,643 units, led by rising activity in Ontario, Quebec and B.C. It was also the first time that new listings for resale homes surpassed the 70,000 mark.
“This builds on strong sales we’ve seen in the first part of the year and continues the momentum for resale housing that began towards the end of last year,” Mr. Klump said.
Mr. Porter said the booming commodities market in western provinces is another factor driving residential real estate sales to record numbers. “Particularly in oil and gas, but also Saskatchewan’s uranium, potash and even grain markets, have all contributed to a strong economy out West.”
Not all provinces experienced strong sales growth. Newfoundland, New Brunswick and Manitoba all saw a decline in the dollar volume of home sales in April.
Sales are forecast to reach even higher levels by the end of the year in all provinces except B.C. Price increases are expected to finish this year strong at 9.5 per cent.
“The year-to-date activity was up to 6.7 per cent, and that’s a new record for this year”, “Mr. Klump said.
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