Calgary posted a 4.8 per cent increase in the MLS® Home Price Index (MLS® HPI) for May 2012, second only to Greater Toronto said a report by The Canadian Real Estate Association.
Nationally, the MLS® HPI increased 5.2 per cent from April to May of this year. Greater Toronto increased by 7.9 per cent followed by Calgary with Greater Vancouver rounding out the top three with an increase of 3.3 per cent.
While Flaherty singled out Toronto as one of the markets that had not seen the “significant moderation” needed for the federal government to remain on the sidelines, the Calgary market has remained relatively stable compared to the price escalation seen elsewhere. According to CREA®, the average price of a Calgary home is forecast to rise from $402,851 in 2011 to $410,000 by the end of 2012.
With the new rules obviously affecting buyers across the country, many are voicing concerns that the changes could have an adverse effect on Canada’s housing market.
“Recent statistics from CREA indicate that the national housing market remains balanced. The impact of measures like those announced today must be closely monitored to ensure they have the anticipated impact and don’t create a spillover effect and slow the economy,” said CREA president Wayne Moen. “For these reasons, going forward, we would urge the government to consider the impact of further interventions in the market carefully.”
In CREA’s Spring 2012 Calgary Housing Market Outlook, released just prior to the announcement of the new lending guidelines, average home prices in Calgary were forecast to increase over the next two years. However, the escalation hardly qualifies as a sign of an overheated market, with the average price of a Calgary home forecast to rise by 1.8 in 2012 and 2.4 in 2013, compared to prices in Ontario, which are forecast to rise by nearly 10 per cent over the same period.
Responding to the changes, which are set to take effect July 9, CREB® economist Ann-Marie Lurie echoed the statements from Moen, discussing the possible impact on first-time homebuyers.
“[The changes] will likely have a cooling impact on the local housing sector as some consumers may no longer be able to enter the market. Furthermore, buyers may have to reevaluate what price range they can afford,” she said. “These changes may have a dampening effect on sales and price growth, however we are not expecting a significant reversal of current momentum.”
Calgary’s May increase of 4.8 per cent was the largest year-over-year gain in the city in nearly two years as well as the highest MLS® HPI since August 2008.
“While price gains overall are funning steady, divergent trends among local markets show clearly that all real estate is truly local,” said Wayne Moen, CREA president. “Because price trends are different between markets and within them, anyone buying or selling a home should consult with their REALTOR® to best understand how the housing market is shaping up locally.”
As far as Benchmark housing types, two-storey single-family homes posted the strongest year-over-year growth in May at 6.7 per cent followed by one-storey (5.8%), townhouses (3.3%) and apartments (2.95%).
“As always, prospects for home price trends depend on buyers willingness to pay and sellers expectations and motivations, both of which are tied to economic, labour market and interest rate prospects,” said Gregory Klump, CREA’s chief economist.