Saskatoon housing prices on the rise

Sales above five-year average

House prices continue to climb in Saskatoon in the second quarter of 2012, according to the latest Royal LePage House Price Survey and Market Survey Forecast.

“Sales have consistently been above the five-year average every month this year,” Royal LePage Saskatoon Real Estate’s Norm Fisher said, adding, “Increased demand and decreased supply has put some upward pressure on prices over the quarter.”

The survey showed strong year-over-year price increases for all three housing types surveyed in Saskatoon.

Standard two- storey homes were up 7.3 per cent, selling for a second quarter average of $379,500, compared to the same quarter in 2011. Detached bungalows saw a six per cent increase over the same quarter last year, selling for an average of $351,125. Standard condominiums sold for an average price of $255,667, a 5.6 per cent year-over-year increase.

Fisher said sales are up across all price ranges, especially in the $250,000 to $300,000 range.

There were 243 sales in that price range in the second quarter of 2012 compared to 146 in 2011.

New mortgage rules that came into effect this week limiting mortgages to 25 years has had only a marginal impact on the market so far, he said.

Fisher said some sales were rushed to get in on the 30-year mortgage before it was stopped, “but the number of sales that we are seeing didn’t take a big spike upwards in the last couple of weeks.”

It will have an impact moving forward though.

Fisher said the change from a 30-year mortgage to a 25-year mortgage is the equivalent to about a one per cent increase in interest rates.

“But on the flip side, the interest-rate environment is still pretty attractive.”

He feels the rest of the year will see stable prices.

“I think we have probably reached our peak price for the year,” he said.

Nationally, in the second quarter, standard two-storey homes rose 4.7 per cent year-over-year to $408,423, while detached bungalows increased 5.5 per cent to $376,311. Average prices for standard condominiums increased 3.3 per cent to $245,825.

The survey said some major regions continue “to grow unabated while others peaked and began to pull back for the first time in three years.”

“We have had three years of solid house price appreciation in almost all regions of the country,” Phil Soper, president and CEO of Royal LePage Real Estate Services said.

“Confidence in Canada’s real estate market is sound, but home prices cannot grow faster than salaries and the underlying economy indefinitely.

“Some regions have reached or perhaps even exceeded the current upper level of price resistance as buyers have embraced an era of historically low mort- gage rates.”

The report suggests some areas are now likely too expensive for buyers at the current levels.

Some of the local markets it tracks showed declines in the second quarter compared with the first quarter.

Emanuella Enanajor, an economist at CIBC, says slowing mortgage and consumer debt accumulation indicates that housing prices may dip about 10 per cent over the next year or so.

“Interest rates support demand for housing,” Enanajor said.

“However, rates are flat. They’re not going down. They’re stable. And the impact of those stable, low rates is fading.”

Some cities saw prices fall.

In the West, for instance, the average price for bungalows sold in Victoria fell to $460,000 from $470,000 in the first quarter and $475,000 in the year-earlier period.

In the East, the average price for bungalows sold in Saint John, N.B., fell to $175,037 from $191,000 in the first quarter and $179,950 in the second quarter of 2011.