Real estate market to moderate
The Canadian Press
Bank of Nova Scotia expects a more moderate rate of Canadian real estate construction, sales and price gains in 2008, compared with the heated activity of recent years.
Adrienne Warren, senior economist at the bank, said Tuesday the key factors will be “decreasing affordability, especially for first-time buyers, and some softening in domestic economic conditions associated with the intensifying U.S. slowdown.”
She said housing starts “will likely ease to around 204,000 units, still firmly above underlying household formation, with the more affordable multiple-family segment holding up better than single-detached construction.”
Ms. Warren said housing starts totalled 228,343 units in 2007, essentially matching the high level of activity of the previous two years and only 2% below the peak of 2004.
Strength was evident across the country, but was led by more than a 60% surge in new homebuilding in Saskatchewan, underpinned by strong job growth, good affordability and a positive shift in interprovincial migration.
Resale activity was equally brisk, with multiple-listing sales reaching a record in 2007 and average home prices climbing 11%.
While Western Canada continues to lead in price appreciation, average home prices rose by at least 5% in all provinces last year.
Also speaking at Scotiabank’s real estate outlook forum, Phil Soper, chief executive of Brookfield Real Estate Services, predicted that “balanced conditions will prevail throughout 2008, which will mark a return to a more ‘normal’ environment …”
Ms. Warren said the current housing upswing “is going on 10 years, whereas the prior three cycles ranged from five to six years. It has also outlasted the housing booms experienced in many other advanced economies this decade.”
However, average annual price appreciation over this period has been typical at just under 6% per year, well below the almost 10% average gains recorded in the late-1980s.
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