Housing market decline not over: Royal LePage

OTTAWA -

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One of the country's leading real estate companies is projecting a further decline in Canada's resale real estate market in 2009.

Photograph by : Joe Raedle, Getty Images

Sales are forecast to fall 3.5 per cent to 416,000, Royal LePage said, describing such a decline as relatively mild compared with the 17.2 per cent slide to 431,000 units that occurred last year.

"Most consumers are not aware that, nationally, Canadian housing market activity peaked in 2007 and has been adjusting lower since," Phil Soper, president of Royal LePage Real Estate Services, said in a statement. "We are well into this inevitable cyclical correction."

The company said in a release that "emotional reaction to recent economic and political instability" led to a sharp drop in the market in late 2008, but that "a more rational understanding of the issues" should lead to some recovery in the latter part of 2009.

The report forecasts diverging trends in different parts of the country. Vancouver, Canada's most expensive real estate market, is expected to witness the most dramatic declines in pricing, at about nine per cent, after experiencing above-average appreciations over the last decade.

Prices in Toronto are also expected to fall, by four per cent. The going rate for housing in other central Canadian markets such as Ottawa and Montreal is anticipated to stay relatively flat.

Smaller markets in Ontario that are more dependent on the troubled manufacturing sector for employment will see above-average declines in housing sales and prices, Royal LePage said.

Western markets such as Calgary and Edmonton are anticipated to see further erosion in housing prices in the early part of 2009 though some recovery is expected in the last half of the year, resulting almost-flat price movement by year's end.

Royal LePage said some cities like Regina and Winnipeg, where prices remain below the national average, should see some moderate price gains over the next year.

The company said it expects some increase in house foreclosures this year, but not to the same degree as in the U.S., due to the fact there is less prevalence in Canada of subprime or otherwise risky mortgages.

TABLE

Forecast average housing prices for 2009 (% change from 2008)

Halifax $234,300 (+1%)

Montreal $254,400 (-1%)

Ottawa $291,000 (0%)

Toronto $364,800 (-4%)

Winnipeg $204,900 (+4%)

Regina $243,300 (+6%)

Calgary $402,000 (-1%)

Edmonton $333,000 (0%)

Vancouver $540,100 (-9%)

Canada $295,000 (-3%)

Source: Royal LePage

Published Wednesday, January 14, 2009 8:57 PM by Robert Taylor & Rhea Dichter