The Canadian housing market continues to defy expectations of a price slowdown, propped up by a solid economy and low interest rates.
Royal LePage Real Estate Services says average prices kept heating up during the summer despite swelling numbers of homes for sale in many markets.
The national average price of a standard bungalow was up 7.4 per cent from a year earlier at $265,405, the report said, while the national average price of a condominium increased 6.8 per cent to $185,195 and a standard two-storey home cost 6.7 per cent more at $324,066.
In Saskatchewan, a detached bungalow rose 8.2 per cent to $156,083 and a standard two-storey by 7.5 per cent to $166,500.
In Calgary, a detached bungalow rose 7.9 per cent to $252,411 and a standard two-storey by 8.8 per cent to $264,389.
Sales activity remained strong across the country through the usually slack summer months, Royal LePage added, reporting a record volume of August sales.
Victoria showed the steepest price increases and overall the gains were skewed toward Western Canada, where high energy prices have lifted the economy and kept inventory tight.
Growth was generally slower in markets east of Manitoba.
"For two years running the strength of this expansion has exceeded our expectations,'' Phil Soper, president and CEO of Royal LePage, said in an interview.
The reasons are "the continuing strength of the underlying economy'' and "while interest rates have risen, they came later in the cycle than we thought they were going to, and the impact of the interest-rate increases has been less than expected.'' That said, Soper added that "the trend, I think, is still there,'' and this year's rate of price appreciation will be less than last year's.
"We are gradually slowing, and the major markets are certainly the ones we're seeing that in.'' Soper said he sees "little evidence'' of a price bubble in any Canadian market.
"What is remarkable is the length of time that this expansion has covered, over five years, rather than size of the year-over-year price increases,'' he said.
However, a rising inventory of homes for sale is a worrying sign, warned David Rosenberg, chief North American economist for Merrill Lynch, who long has been sounding the alarm about a housing bubble in the United States.
"We are now beginning to see early signs of a changed complexion in residential real estate, and as has happened at the tail end of every bubble in the past, what does them in during the last phase is the unintended inventory buildup as supply ramps up faster than demand,'' Rosenberg wrote in a commentary.
"As sure as night follows day, pricing will follow this inventory overhang; in fact, this process may already be in motion.''
