The Canadian Real Estate Association (CREA) reported that the national average house price in June rose to $372,700, up 8.7% from June 2010.
The organization noted in previous news releases that red-hot markets in Vancouver played a large part in skewing the national average upward. But Vancouver had less of an influence on the numbers this time, as nearly 80% of local markets reported year-over-year gains, while areas, like Richmond and West Vancouver, actually saw high-end sales soften.
But the upward trend in house prices is nearing its end, according to TD Economics. The financial group released a report earlier this week forecasting a 10.2% decline in house prices from their peak over the next two years.
Derek Burleton, vice president and deputy chief economist at TD Economics, said that this impending decrease will largely result from tighter mortgage rules, higher interest rates, along with moderating income growth and higher savings levels during 2012 and 2013.
“We do expect to see more modest spending on big ticket items, like housing, in the next couple of years,” he told CRE Online. “So it’s going to be more of a shift to thrift. I think that after the significant run up in borrowing largely related to housing in recent years, consumers are likely to save more and spend less.”
Sales in June rebounded, with seasonally adjusted transactions edging up 2.6%, compared to May, and actual transactions jumping 10.8%, compared to June 2010.
CREA Senior Economist Gregory Klump said year-over-year comparisons for June largely reflect falling sales last summer, a factor that may also affect July’s numbers.
Though national sales for the second quarter tumbled by 4.7%, Klump said the housing market should remain on solid footing.
“The rise in monthly home sales activity at the end of the second quarter, upbeat business sentiment and hiring intentions, and signs that the Bank of Canada is in no rush to raise interest rates bode well for home sales activity and prices going into the second half of 2011,” he said in a statement released today.
For now rising demand should counteract a slight rise in new home listings, which rose 1.8% from May to June, the release said.
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