TORONTO (Reuters) - The price of a Canadian house will rise only modestly this year, and home sales will fall from last year’s record levels, realtor Royal LePage Real Estate Services said on Thursday.
The realtor said it expects the average house price to rise by 3.5 percent to C$318,000 ($318,000) by year end. But the number of home sales is expected to fall by 11.5 percent to 461,000 units in 2008 from a record-setting pace in 2007.
Phil Soper, president and chief executive of Royal LePage Real Estate Services, said Canada’s resale housing market proved resilient in the second quarter, even as consumer sentiment worsened in the face of a U.S. housing slump.
“Our research indicates that all markets will continue to perform well, albeit at a tempered pace,” he said.
The report, which surveyed 17 Canadian cities, logged lower house prices in Alberta’s main cities of Edmonton and Calgary, two markets where an energy sector boom had sent prices soaring.
The central Canadian cities of Montreal, Toronto and Ottawa saw strong second quarters and prices are expected to rise, while St. John‘s, Newfoundland, is expected to remain an economic bright spot in Atlantic Canada.
Doug Porter, deputy chief economist at BMO Capital Markets, agrees there will likely be a modest rise in house prices, but the fallout from the U.S. housing market and high oil prices have put a “chill” in the Canadian market.
“I think it will be a struggle in a lot of cities to see price increases in the second half of the year,” said Porter, though he noted there are still “pockets of very real strength.”
The Canadian Real Estate Association said on Tuesday that sales of previously owned homes dropped 13.3 percent in the first half of 2008, while new listings jumped 8.1 percent.
The association called the shift a “balancing out” of the housing market, noting that it follows six years of double-digit sales growth, capped off by a record 2007.
Reporting by Jennifer Kwan; editing by Janet Guttsman