“The sun has yet to shine literally and figuratively in Newfoundland this year,” Mark Norman, a residential specialist with Verico Acme Financial Inc., told MortgageBrokerNews.ca. “We’re just heading into the spring and the market is heating up.”
The assessment follows release of The Royal LePage House Price Survey, which shows the average price of a home in Canada increased between 3.5% and 4.3% in the first three months of 2011 compared to the year-ago period.
LePage is chalking up the modest growth to a one-two shot in the arm: low interest rates and a strengthening economy. The value gains appear to have been across the board, with the national average price for a detached bungalow rising 4.3% year-over-year to $341,355. The standard two-storey house rose a more-modest 3.5% to $379,388, along with a 4% hike in the price of a standard condo, now averaging $237,919.
Those gains may counter concerns that Canada is on the threshold of a housing correction, although Norman and others concede the sector is slowing. While Newfoundland -- Norman’s home market – isn’t likely to achieve the double-digit value gains of previous year, housing prices in some areas should continue to better the national performance highlighted in the Royal LePage report, he said.
“While Canada was in the Great Recession, we in Newfoundland were experiencing the Great Build,” Norman said. “It was so hot for so long, it’s inevitable that it would have to enter a leveling period.”
According the survey, year-over-year price appreciation softened in St. John's during the first three months of 2011. The price of detached bungalows, in fact, dropped 6.3 % year-over-year to $178,000.
Vancouver’s price escalation helped to lift the Canadian average for a standard two-storey home. It jumped nearly 10% year-over-year to $1.08 million in the country’s hottest housing market. Detached bungalows in Montreal rose 7.6% year-over-year to $276,343 and standard condominiums in Halifax rose 13.1% year-over-year to $191,500.
Expecting spring to better that kind of performance may be asking too much, suggested Phil Soper, president and chief executive of Royal LePage Real Estate Services.
"The rate at which Canadian homes are appreciating may well have peaked for the next year or so,” he said Tuesday. “We expect house prices will continue to creep up, but most of the excess demand created by the initial drop in interest rates has been satisfied…lower single digit %age increases are more likely for the balance of the year."
That’s a fair statement, Marty Coubrough, broker/owner of Verico One Link Mortgage in Winnipeg, told MortgageBrokerNews.ca. Still, he argued significant demand remains unsatisfied. In fact, consumer confidence may have been bolstered by the country’s continuing push to full recovery.
“Homeownership is an important aspiration for many Canadians and it remains a good investment,” he said.
Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate