Daniela Minicucci, Global News : Wednesday, October 05, 2011 10:00 PM
TORONTO - Improved economic conditions across Canada contributed to a rise in home prices nationally, according to a new national home price survey by Royal LePage.
The House Price Survey released Wednesday finds the average price of a home increased between 5.7 per cent and 7.8 per cent in the third quarter, compared to 2010 data.
Low interest rates boosted consumer confidence and demand, effectively driving up home prices in the country's largest markets.
In the post-recession environment, the real estate market is largely a seller's dream.
As Canada continues to perform better against global economic turmoil, housing prices will continue to rise at a rate of about five per cent annually, according to Phil Soper, president and chief executive of Royal LePage Real Estate Services.
Promise of continued low interest rates from Bank of Canada governor Mark Carney "stoked the market and brought an unusual number of buyers to the table," Soper explained.
"Over the long haul, homes have reliably appreciated in Canada," he said. "If we continue to claw ourselves into a better position economically as a nation, it's likely that will support job growth which will support home prices."
The good news is that real estate prices should level-off once post-recessional demand is satiated and the cost of borrowing increases.
"People buy homes not based on their sticker price but on the carrying costs, or the monthly mortgage payments. The one thing that can impact mortgage payments more than anything else is the cost of money. When interest rates go up, because they will go up eventually, we will see a fall off in demand," Soper said.
For house hunters looking to buy before prices rise again, the post-summer period generally sees a dip in real estate activity, which is often accompanied by a dip in prices.
"If you're willing to shop for a home in the winter, you typically find homes that are priced lower than they would be in the spring, which is the period of time where most of the activity and most of the demand happens," Soper said.
Real estate listings generally taper off in December as homeowners are normally tied up with the holidays. Overall, cold and slushy winter weather does not appeal to would-be movers, which makes November to January generally the cheapest time to buy.
"The downside is there's less available... you might not find exactly what you're looking for," Soper said, adding that most home sellers are advised to hold off until the spring when homes look better, gardens are in bloom and moving is less of a nuisance.
"The upside is you won't be in a bidding situation with six other people all wanting the same property, emotions overriding sense and people overpaying for something."
For buyers thinking of making a move, consider acting sooner rather than later to avoid getting completely priced out of the market.
But Soper warns not to "try to pick a lull in the market as if it was a stock."
"Like the stock market, it's incredibly difficult to predict home prices," he said.
"It's a limited quantity commodity. As with other restricted quantity commodities, prices tend to rise over time," he said, adding that it's unlikely Canadians will see a significant decline in national home prices as the economy improves.
