Across Canada, real estate markets pause for a breather | Slowest in the West - BC Real Estate Snapshot

Housing: Bank of Canada seen as welcoming price moderation. Originally published in The Province newspaper and written by business reporter Jim Jamieson.

New house prices for real estate in Canada stayed the same from November to December – the first time in 6 ½ years that month-to-month prices didn’t rise, Statistics Canada said yesterday. They were also flat in Greater Vancouver, but real estate industry insiders don’t see the lull as a sign that the bubble in the real estate market is about to burst in the region’s red-hot market.

“We’re just taking a breather right now,” said Peter Simpson of the Greater Vancouver Home Builders Association. “It’s going to be more of a minor correction and a return to a more balanced real estate market.”

Simpson said his association is forecasting price increases of between seven and nine per cent in the Lower Mainland this year for new homes, from single-detached to multi-family real estate.

He said high land prices and real estate development costs combined with a possible interest-rate reduction may fuel more real estate activity. “A builder is like any other manufacturer,” he said. “Any extra costs they incur have to be passed along to the real estate buyer.”

StatsCan said Vancouver was one of six metropolitan areas that registered no monthly change. The others included Halifax, Charlottetown, Quebec, Montreal and Ottawa-Gatineau. Among those showing decreases were Victoria, which saw prices of real estate fall 0.4 per cent, and Calgary, where they dropped half a percentage point.

Vancouver last had a zero price increase for new houses in March 2006, but the last time it occurred for Canada as a whole was in June 2000.

With real estate prices of single-family detached homes straining affordability, buyers have increasingly migrated to multi-family property developments – whose real estate market segment has now doubled to about 80 per cent of new home sales.

Jason Craik of Mac Marketing Solutions, which markets multi-family projects in Vancouver, said he sees a levelling off in that segment, although circumstances can vary.

“Demand will be good, but I just don’t think you’ll see buildings selling out on weekends anymore,” he said. “I don’t think we’re going to see any crazy increases. “It’ll be four or five per cent. We’re into more of a normalized market situation in Vancouver real estate.”

Craik said affordability will be more of an issue, “which is why the government needs to be more creative in terms of density.”

Canada Mortgage and Housing Corp. reported that housing starts in the Vancouver area were up 22 per cent in January to 1,327 units, compared to the same month last year – including a 51- per cent increase in multi-family unit construction real estate and a 36 per cent decline in single-detached units.

Year over year, Vancouver prices were up 8.2 per cent – well below Calgary (up 42.2 per cent), followed by Edmonton (41.5) and Saskatoon (16.1). The moderation in new real estate housing prices should put less upward pressure on inflation in the coming months, analysts said.

That would be welcomed by the Bank of Canada, which has warned that soaring real estate housing prices, especially in Western Canada, are one of the major inflation threats.

jjamieson@png.canwest.com

Slowest in the West – BC Real Estate Snapshot

The average selling price for a home in B.C. went up a whopping 17.7 per cent in 2006, according to the Canadian Real Estate Association. The CREA says that rate will slow to 9.4 per cent this year and even further in 2008, when the rate of price increases in real estate will be lowest in Western Canada.

Average residential real estate selling price, forecast % change 2007-2008.

B.C. +6.1%
Alberta +7.2%
Saskatchewan +6.5%
Manitoba +7.7%
Ontario +3.1%
Quebec +3.3%
New Brunswick +2.7%
Nova Scotia +4.3%
P.E.I. +3.1%
Newfoundland +2.0%
Canada +4.8%

For more information about the Lower Mainland Vancouver property real estate market, click here.