Canadian home prices went up in Q2 and will continue to rise in areas such as Toronto and Winnipeg, says the latest Royal LePage report.
But, findings suggest the country’s residential real-estate market is at a tipping point, with some areas likely too expensive for buyers at the current levels.
The national average prices for one-storey bungalows, two-storey detached homes and condominiums all jumped in the April to June quarter; The average for bungalows was $376,311, up over last year and more than $20,000 higher than Q1 2012 levels.
The national average price for two-storey detached homes also shot up from $390,163 last year to $408,423.
The national average price for condos was $245,825, bumped up from $243,153 in the first three months of 2012.
Most of the major cities tracked by Royal LePage showed increases from the first quarter of 2012 and the second-quarter of 2011.
There were a few exceptions scattered across the country, however, with some types of homes in other major cities showing lower local average selling prices.
“Confidence in Canada’s real estate market is sound, but home prices cannot grow faster than salaries and the underlying economy indefinitely,” says Phil Soper, the president and chief executive of Royal LePage Real Estate.
He adds, “Some regions have reached and even exceeded the current upper level of price resistance, as buyers have embraced an era of historically low mortgage rates.”
Soper says the changes to mortgage rules introduced by Flaherty over the past four years—the latest of which came into effect yesterday—will keep some people on the side-lines, particularly first-time buyers who account for up to half of the transactions.
“The cumulative impact of these new regulations has created a significantly higher hurdle for young buyers seeking their first home, and come at a time when the market was slowing of its own accord. The timing of this intervention was unfortunate.”