An improved supply of available housing in 2004 helped bolster Winnipeg MLS® sales and contributed to a new
all-time record for dollar volume sales,
according to the Winnipeg Real Estate Board.
The board also reported that the increase in dollar volume sales last year pushed up the average MLS® residential-detached home price by 11 per cent to about $128,000 when compared to 2003.
In 2005, the average Winnipeg home price in all housing sale categories, including condominiums — the WREB average is for detached homes only — is expected to rise by six per cent to $127,718, according to a market report released by Royal
LePage Financial Services.
Despite the price increase, Winnipeg will join Halifax and Regina as one of the most affordable cities in Canada, reported the Survey of Canadian House Prices.
The three most expensive cities in which to purchase housing in 2005 will be Vancouver with a projected average price of $399,000, Toronto with an anticipated
average of $323,000, and Ottawa with an average price expected to be $243,590.
Cliff King, the out-going president of the Winnipeg Real Estate Board, said a listing increase of eight per cent in 2004 contributed to an MLS® sales increase of six per cent to 11,447 units, when compared to 2003, and a dollar volume sales increase of 17 per cent to $1.34 billion.
“However, the improved supply of listings was not enough to meet the demand as 44 per cent of all residential-detached properties sold at or above list price.”
The average house price in Canada
is forecast to rise by 4.5 per cent to $236,588 in 2005, as listing levels rise and demand reacts to the price increases of the past year. Unit sales are projected to decline by one per cent to 457,325 units sold in 2005.
According to the report, 2005 will represent a market in equilibrium where both buyers and sellers will equally share the benefits. Resale activity will dip only slightly as the market adjusts.
A readjustment in the Winnipeg market occurred in December, according to the WREB, as MLS® sales dropped by 13 per cent when compared to the same month last year.
“At some point the board acknowledged sales would have to cool off and it is appropriate it happened in December given the fact that winter arrived with a blast,” said King.
“One thing that was consistent in
December in comparison to previous months is the healthy percentage spread between sales and dollar volume — a clear indicator of the price increases we experienced throughout 2004.”
“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,” said Phil Soper, president and chief executive officer of Royal LePage Real Estate Services.
“We currently have the highest levels of listing inventory available in the past four years, and this will clearly have a mitigating effect on price increases.
“Sound market fundamentals will support a robust 2005 housing market, but what will emerge is more normalized, sustainable housing market activity.
He said buyers will continue to benefit from historically low interest rates as the low cost of borrowing money extends homeownership to a majority of Canadians. Interest rate increases are likely to be moderate, particularly in view of the strengthening Canadian dollar, and gradual increases will work to temper the current torrid pace of market activity.
Edmonton property values are expected to post the greatest increases next year,
rising by an anticipated seven per cent to $191,851, followed by Calgary at 6.2 per cent to $239,000. Winnipeg will follow the two other Western cities with a six per cent increase.
“These cities will experience some “catch-up” activity in 2005 relative to other markets in the country,” said the report.
The most marginal increases are slated for Halifax at 1.7 per cent and Toronto at 2.5 per cent in 2005. The anticipated
average price in Halifax is $119,000.
“The WREB is confident 2005 will be another good year for MLS® market activity,” added King. “Winnipeggers are bullish for their prospects and for good reason, with favourable employment conditions and continuing low interest rates.
“Our optimism is tempered to some extent by the province’s lack of progress on dealing with our unreasonably high education taxes on property, and it will be a real significant issue in 2006 when property taxes will be based on much higher property assessment values.”
The city has completed a reassessment based on 2003 property values. The
city-wide assessed residential property value is up 23.2 per cent when compared to 1999, the last time a reassessment took place.
The Royal LePage report said Canadian market fundamentals are sound and projects that the economy should grow at or close to its long-term pace of three per cent. In addition, there will be low inflation, federal and trade surpluses, positive job growth, and strong domestic demand from both households and business.
Despite little change on the manufacturing side, overall job growth should continue, according to the report, driven in large part by construction jobs thanks to the housing boom. This will translate into increasing personal disposable income and strengthened housing demand.
With strong disposable income growth and an employment rate near an all-time high, the report said consumer confidence is high. Overall household debt is manageable and there is still the propensity to spend. The buoyancy propels housing demand as well as the demand for consumer goods to support the housing purchase.
The report said population growth is fundamental to the housing markets. Offsetting the very small natural rate of population growth in Canada is a net migration rate that could exceed expectations.
The new home market is under pressure from rising construction costs and the
upward trend in mortgage rates, according to the report. It predicts overall starts may drop slightly, but the adjustment will vary by region and will not be sufficient to impact strong employment in the construction
Possible challenges in 2005 include the nation’s vulnerability to escalating energy prices, appreciation of the Canadian dollar, and possible softening of demand in the U.S.
“Fortunately nothing on the immediate horizon appears to directly threaten the prognosis for a robust housing market in 2005,” added the report.