Price rises ‘modest’

Tuesday, December 21st, 2004

But our homes still most expensive

Ashley Ford

First the good news.

Greater Vancouver homes will only see a modest three-per-cent price increase next year, less than the national average of 4.5 per cent, as the hot housing market catches a bit of a chill.

The bad news is that even this increase will ensure we continue holding the dubious title of the most expensive housing market in the country, Royal LePage Real Estate Services said yesterday in its 2005 market survey.

The average price of a Vancouver home will rise to $399,000 next year, up from this year’s $387,500, putting us well ahead of Toronto at $323,000 and Ottawa at $243,000.

The hottest cities in the country next year will be Edmonton and Calgary where prices are expected to jump by seven and 6.2 per cent to $191,851 and $239,000 respectively.

While the average anticipated national increase of 4.5 per cent represents a significant change from this year’s 9.2-per-cent rise, it nevertheless is still virtually double the expected rise in the cost of living next year.

Sales will also catch a bit of a sniffle next year as well, falling by one per one per cent to 457,325 units.

Vancouver sales will drop by 1.6 per cent to 37,000 units from this year’s 37,600.

“If 2004 represents a record pace in terms of volume and price increases, 2005 will represent a market in equilibrium where both buyers and sellers will equally share the benefits,” said Royal president Phil Soper.

“Relative to the breakneck pace of 2004, the Canadian housing market will experience a deceleration of the frenetic sales activity that has characterized the market in the past several years,” he said.

“Sound market fundamentals will support a robust 2005 housing market, but what will emerge is more normalized, sustainable housing market activity,” Soper said.

Buyers will continue to benefit from historically low interest rates as the low cost of borrowing money extends home ownership to a majority of Canadians, Royal said.

Interest-rate increases are likely to be moderate, particularly in view of the strengthening dollar.

“Despite little change on the manufacturing side, overall job growth should continue, driven in large part by construction jobs thanks to the housing boom,” it said.

Job growth and low unemployment will help buoy consumer confidence and spending, it said, despite the fact consumer debt is at an all-time high relative to incomes.

Royal warns that house construction could slow due to rising costs and some increase in mortgage rates.

It also agrees there is a risk the Canadian economy may not do as well because of escalating energy prices, further appreciation of the loon and the possibility of a weaker U.S. economy.

© The Vancouver Province 2004


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