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Sales will Stabalize in 2nd Half

Canada home prices, sales seen stabilizing in 2nd half Wed Jul 7, 2:21 PM

TORONTO (Reuters) - Sales of Canadian homes should slow in the second half of the year from the blistering pace set in the first six months, while price appreciation should taper off in most cities, a leading real estate broker said on Wednesday. Home prices rose in the second quarter in all key housing types surveyed by Royal LePage, building on the momentum of the previous quarter.

Looking ahead, an increase in the supply of homes for sale will bring down average Canadian home prices during the third and fourth quarters after the surge in activity in the first half, Royal LePage said in its second quarter House Price Survey. By year end, the broker expects home price appreciation to average 6.8 percent year over year to C$342,000 ($325,714), while home sales will increase by about 1 percent to 470,000 units compared to 465,251 units in 2009, Royal LePage said.

That compares with double-digit price appreciation and sales growth during the peak of the Canadian housing boom. The report is also in line with the view of many market watchers who say the residential home market will moderate in the second half of the year, partly because of rising interest rates.

"An expected increase in the supply of homes on the market will now bring stabilization in prices, and in some cities we will see both prices and unit sales decline toward the end of the year," said Phil Soper, chief executive of Royal LePage Real Estate Services.

"This should not be interpreted as a severe correction but rather a natural reaction to the market having peaked quite early this year."

Overall, the broker expects the market to be supported by firm consumer confidence and a healthy job environment. Home prices in markets with strong local economies, such as Alberta, are expected to keep rising.
The average price of a detached bungalow in Canada climbed 9 percent to C$331,868 from a year earlier, while standard two-story homes rose 8.7 percent to C$367,835. Condominiums rose 7.3 percent to C$230,014.
In the second quarter, St. John's, Newfoundland, reported the sharpest price increases, up an average 18.4 percent to 19.6 percent across three housing types, spurred by its robust oil sector.

Vancouver and Toronto, two of the country's biggest markets, continued to show firm gains, though both are also expected to experience downward pressure in prices for the balance of the year.
Detached bungalows led the strong gains in Vancouver, up 19.1 percent in the quarter to C$905,000, while other housing types rose between 16.6 percent to 17.6 percent.
Greater Toronto home prices rose an average 7.7 to 11.4 percent year over year, with detached bungalows reaching an average price of C$481,933 in the second quarter.

-half activity was spurred by consumers looking to dodge new mortgage rules and new tax regimes in Ontario and British Columbia that took effect on July 1.
The Mortgage Group Canada (www.mortgagegrp.com)
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