House price appreciation slows in 3rd quarter
Growing number of listings expected to weigh on market
Strong economy points to healthy housing demand: Analyst
TONY WONG
BUSINESS REPORTER
Don't expect Toronto area home prices to climb as quickly as in previous years.
A steady rise in the number of listings available on the market means that home-price appreciation will moderate, says Royal LePage Real Estate Services.
In 24 Toronto area neighbourhoods surveyed by the firm, the average price of a standard two-storey home increased by a modest 4.8 per cent to $459,250 as of the third quarter of 2005 compared with a year earlier, the brokerage firm said yesterday. Price growth is expected to moderate even more next year.
"We are seeing the day come that many have long predicted, that there is a slowing rate of appreciation in the markets that have had the biggest price gains, like Toronto," said Phil Soper, president and CEO of Royal LePage, in an interview.
In previous years, price appreciation had been in the 6 per cent to 7 per cent range. However, Soper said, by the third quarter of 2006, he expects prices on standard two-storey homes to increase by less than the 4.8 per cent seen this year.
"There are more units on the market, and this means that the same willingness to pay any price for a home is gradually disappearing," said Soper.
"Homes that are priced above the market in an effort to make a quick buck are not moving."
According to LePage, the value of a standard condominium rose by 3.6 per cent to $242,664, year over year, and a detached bungalow rose to $364,111, an increase of 6.4 per cent.
The big gainers were neighbourhoods such as Riverdale and the Annex, and outlying suburbs such as Scarborough and Oakville.
The Annex neighbourhood saw a 12.9 per cent increase, with a standard two-storey home now going for $745,000. A two-storey home in Riverdale is now $325,000, up by 12.1 per cent.
In Scarborough's Agincourt neighbourhood, a two-storey home now goes for $283,000, up 12.7 per cent, while in Oakville you will need $325,000 for a similar home, up 12.1 per cent.
Royal LePage defines a two-storey detached home as having three bedrooms with a detached garage.
A single-storey home with three bedrooms and a one car garage is considered to be a detached bungalow.
A standard condominium is considered to have two bedrooms with an average space of about 900 square feet.
Soper said he expected gains to moderate, especially since interest rates are forecast to rise.
Toronto housing analyst Will Dunning expects the average price of a Toronto home to hit $335,200 by the end of this year, compared with $315,278 at the end of last year.
Dunning said strong job creation in the Toronto area is prompting him to revise his housing forecasts upward.
"It appears that the GTA economy is strengthening. Sales trends remain very strong for resale and new construction," said Dunning in a recent report. "Stronger job creation will probably lead to increased housing forecasts."
According to the Toronto Real Estate Board, August was the best month ever for sales of resale homes in the city.
However, listings were up by 8 per cent from July, helping to moderate prices, as resale home buyers placed their homes on the market to move into newer homes, while others placed their homes on the market to take advantage of the improved prices.
Dunning said a surging stock market and rising home prices had created a wealth effect that was translating into an improving job market.
Meanwhile, according to Royal LePage, the biggest gainer nationally was Victoria, B.C., where a standard two-storey was up by 20.3 per cent to $391,000 in the third quarter.
St. John's, Nfld., was also a big mover with a 12.8 per cent increase. A two-storey home there is now $168,800.
Additional articles by Tony Wong |
