Canada's housing market will show moderate growth next year and will be driven by prosperity in the West, a new real estate survey suggests.
A Royal LePage Real Estate Services report says national average home prices will rise by six per cent to $271,800 in 2006, while the number of transactions is projected to fall by three per cent to 467,540 from this year's anticipated record high of 482,000.
Higher home prices in major markets, a general public perception of slower market conditions and moderate interest rate increases are expected to temper market activity as unit sales pull back from the record highs of 2005, Royal LePage said.
"Those looking for a break from the frenetic pace that has recently characterized the housing market will see some moderation next year, but the effects of an unusually strong fall market are expected to carry through into the first half of 2006, with the upward pressure on prices to continue in most areas of Canada," Phil Soper, CEO of Royal LePage Real Estate Services, said in a release.
"While more balanced conditions are expected as demand slows to meet supply, housing starts ease and the underlying Canadian economy continues to operate at near full capacity, prices should rise in most regions," he said.
The increase in spending in western provinces is expected to sustain sizable gains for the housing markets in Alberta, British Columbia and Saskatchewan well into next year, the survey said. Higher demand for labour in the region, especially in the energy and mining sectors, has led momentum in the market.
"The spillover effect of increased capital spending, rising personal earnings and the subsequent increase in population through migration will allow real estate markets in Western Canada to outpace the rest of the country," Soper said.
Average home prices for the nine markets examined suggest that in 2006, the two most affordable cities to buy housing will be Regina ($138,000) and Winnipeg ($152,000), while the three most expensive cities to buy real estate are expected to be Vancouver ($469,700), Toronto ($364,000) and Calgary ($283,400).
