In the Q3 House Price Survey released by Royal LePage today, the average house price in Canada has increased year-over-year, up anywhere between1.8% and 4.8%. The price for a two-story home has risen to $403,747, up 4% from this time last year. The largest increase came from detached bungalows, the average price currently sitting around $366,773.
According to Phil Soper, president and chief executive of Royal LePage, the slowing of the market in light of the changes to mortgage rules put in place in July was not totally unexpected.
“A drop in the number of homes trading hands typically precedes a period of softening house prices,” he said. “Where there is reduced demand, those who want to sell their homes adjust their asking price to stimulate interest”
During the third quarter, unit home sales were positive in July, fell 9% year-over-year in August, and, said Soper, “we are expecting September to show a decline as well.
“We had predicted this cyclical change early in the year, a natural market reaction after a period of strong expansion. Changes to mortgage regulations, which took effect on July 9, accelerated the correction.”
Decreased activity in the first-time home buyer sector has contributed heavily to the reduced sales, adds Soper. First-time buyers typically represent one third to one half of all sales, but with prices soaring and lending restrictions tightening, their absence from the market is strongly felt.
Those Canadians still hoping to purchase around the mortgage rules will likely opt for neighbourhoods other than their first choice, or smaller properties.
“While hard-hit in the short-term, first-time buyers will adjust to tougher mortgage qualifications,” said Soper. “The dream of homeownership is very much alive among young Canadians.”
The market that saw the strongest increase across bungalows, two-story homes and condominiums was St. John’s, with an increase of 9.9%, 8.2% and 9.2% respectively.
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