Canadian property prices expected to be stable in 2011

Stable Canadian Market seen for 2011

National resale property activity in Canada December 2010 was slightly above average for the month but year on year sales are down 14.4%, the latest index shows.

The national trend for monthly sales remained stable in December, with seasonally adjusted sales activity having edged down by less than a percentage point from the previous month, according to the report from the Canadian Real Estate Association (CREA).

Led by Calgary, Winnipeg, and Hamilton-Burlington, seasonally adjusted sales activity was up month on month in half of local markets. Toronto, Vancouver, and Montreal were among the markets that posted a small month on month decline in December.

‘Overall sales activity has improved in recent months, but the upturn has been uneven among local markets,’ said Georges Pahud, CREA President.

National home sales activity improved steadily over the second half of 2010, with seasonally adjusted sales up 18.3% in December compared to the recent low reached in July.   As a result, seasonally adjusted activity in the fourth quarter of 2010 rose 12.1% from third quarter levels, and was up less than a percentage point compared to second quarter activity.

‘The hand off to 2011 for sales activity in the fourth quarter suggests that the continuation of low interest rates will further support the housing market,’ said Gregory Klump, CREA’s chief economist.

‘Sales may be starting to plateau in some of Canada’s most active and expensive housing markets. Combined with a pickup in new listings and further interest rate increases, the stage is being set for smaller price gains and a further deceleration in the growth of mortgage debt,’ he added.

Some 447,010 homes traded hands over Canadian MLS® Systems in 2010, down 3.9% from 2009. Annual sales activity was higher than CREA had forecast previously due to stronger than projected sales activity in the fourth quarter.

The number of new residential listings held steady in December, rising by less than one percentage point on a seasonally adjusted basis. However, new listings remain 14.2% below the peak reached in April 2010.

The report says that the property market remained in balanced territory on a national basis in December, with sales as a percentage of new listings amounting to 55.2%. Just over half of local markets in Canada were in balanced territory in December.

‘With activity having returned to healthy levels and a firm floor under prices, many sellers who shied away from the market heading into the summer are expected to list their properties heading into the spring,’ explained Klump.

‘Sales in the months ahead are not expected to continue trending upward as steeply as they have in recent months, so an increase in new listings may return many sellers markets to balanced territory,’ he added.

The national average price for homes sold in December 2010 was $344,551, up 2% from the same month last year, and stable compared to average price in October and November. About 60% of local markets recorded year on year gains in December. Average price was down on a year on year basis in 30% of local markets, and remained stable in the remainder.

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