Home prices climb but may soon peak: surveys

 CTV.ca News Staff Average house prices continue to climb in Canada, but recent steep increases may give way to a less frantic market by the end of the year, according to a new study released Thursday.
Royal LePage's House Price Survey and Market Survey Forecast noted sizeable year-over-year increases across all types of housing in the second quarter of 2011.
But it said prices may be at their peak in many cities, saying current dramatic increases are simply unsustainable.
"In many of Canada's regional markets, we saw house prices appreciate at a significantly faster rate than wages and salaries, and this trend cannot continue indefinitely," Royal LePage President Phil Soper said in a release.
"We expect price gains to moderate considerably in the latter half of 2011, which should reduce the stress associated with purchasing a new home."
Royal LePage expects 2 per cent fewer houses to be sold in 2011 compared to last year.
"Looking ahead to 2012, signs are pointing to stability for Canadian home owners and new buyers," said Soper. "We believe we are past the period of peak house price appreciation."
Sopher did note, however, that certain neighbourhoods in Vancouver and B.C.'s Lower Mainland could continue bucking the trend, citing international investors as the main factor driving prices up in those areas.
Royal LePage forecasts that Vancouver home prices will be an average of 15.4 per cent higher at the end of 2011 than they were the year before.
Toronto's year-over-year average home prices are expected to rise a comparably minor 6.4 per cent in 2011, with the volume of sales decreasing as few owners decide to sell and fewer new homes are available.
The Royal LePage survey looked at seven standard types of housing in 250 neighbourhoods across the country. It expected most residences to end the year valued about 7.7 per cent higher than they were at the end of 2010.
On average, it found:

• detached bungalows rose 7.5 per cent to $356,625
• two-storey homes rose 6.1 per cent to $390,163
• condominiums rose 3.5 per cent to $238,064

Also released Thursday was the Statistics Canada New Housing Price Index, which averages the prices of new homes across the country. It rose 0.4 per cent in May over April, buoyed by the country's highest monthly increase in Regina, at 1.7 per cent. This was followed by 1 per cent in Kitchener-Cambridge-Waterloo, Ont., and 0.9 per cent in Toronto and Oshawa, Ont.
The notable increase in Regina comes as the cost of land, building materials and labour continues to rise in that city.
Meanwhile, developers in the Ontario cities that saw prices rise cited market competition as the driving factor.
While seven of the 21 urban regions surveyed reported no change in new home prices between April and May, Ottawa-Gatineau saw prices drop significantly, with some builders offering discounted pricing or free upgrade packages to help push flagging sales.
When comparing last May to the same month in 2010, Windsor and Victoria led the cities where prices dropped, with new homes costing an average of 4.4 per cent and 1.7 per cent less than a year ago, respectively.
On a year-to-year basis, the national index rose 1.9 per cent, with the largest gains in St. John's (4.7 per cent), Toronto and Oshawa (4.3 per cent each).
With files from The Canadian Press
Source http://ottawa.ctv.ca/