TORONTO (Reuters) - Canadian house prices rose in the third quarter as very low interest rates supported consumer confidence even as signs of softening in some regions point to a broader slowdown in the months ahead.
The country’s leading real estate broker said on Wednesday the average price of a home in Canada increased between 5.7 percent and 7.8 percent from July through September compared with the same period the previous year, a deceptively big gain because the third quarter of 2010 had been weak.
“The strength in Canada’s national housing market conceals signs of predictable softening in some regions,” said Phil Soper, president and chief executive of Royal LePage Real Estate Services.
“The third quarter saw a return to a normal seasonal business cycle as price appreciation slowed in many areas — with some average values even receding — after the busy spring trading season.”
Soper said a broader slowdown is expected as the economy struggles to gain traction as global growth falters. Even so, he said, “fears of a U.S.-style correction are completely unfounded.”
The average price of a detached bungalow rose 7.8 percent in the third quarter to C$349,974 from a year earlier. Over the same period, the price of a standard two-storey home rose 7.7 per cent to C$388,218, while the price of a standard condominium rose 5.7 per cent to C$239,300.
“Canadian home owners have turned a deaf ear to the negative economic situation shaking housing markets in Europe and the United States,” Soper said.
“A resilient domestic economy coupled with the stimulative effect of ultra low interest rates has extended the post-recession bounce in house prices, but there is evidence of over-shooting in some markets.”
Royal LePage said prices climbed in Toronto across all three housing types in part because of a supply shortage, while Vancouver prices also rose again. Montreal, Ottawa and Winnipeg showed strong price gains as well, while both Calgary and Edmonton remained little changed for condominiums and notched small gains in house prices.
Reporting by Andrea Hopkins; Editing by Frank McGurty