House prices continued to climb higher across Canada in the second quarter of 2010, but sales and prices are expected to fall in the coming months, according to a Royal LePage House Price Survey and Market Forecast released Wednesday.
In the second quarter of 2010, the average price of a detached bungalow in Canada was up 9% to $331,868 compared to a year ago. Two-storey homes rose 8.7% to $367,835 and condominiums rose 7.3% to $230,014. Average prices in Vancouver were up 16.6 to 19.1% for the month while prices in Toronto rose by an average of 7.7 to 11.4%.
The survey said by the end of 2010, home price appreciation will average 6.8% year-over-year nationally, while home sales will increase by just over 1% compared to 2009.
An increase in interest rates in the spring, tightening of mortgage lending rules for first-time homebuyers and investors, and the lead up to the introduction of the HST in British Columbia and Ontario led to a peak in sales activity in the first half of the year.
As a result, "we will see both prices and unit sales decline towards the end of the year," Phil Soper, president and chief executive of Royal LePage Real Estate Services said in a release. "Moving into the next six months . . . home prices will remain flat or decline slightly in most cities, but will be more likely to hold their value or increase in energy-producing economies such as Alberta."
However, he pointed out, "This should not be interpreted as a severe correction but rather a natural reaction to the market having peaked quite early this year."
Tuesday, data from metropolitan real estate boards in Calgary, Toronto and Vancouver showed house prices were up in June compared to a year ago, but existing home sales for the month plunged. Calgary existing home sales fell 42% year-over-year, Toronto sales declined 23% and Vancouver sales fell 30.2%.
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