* Royal LePage survey: prices up in Q3, sales volume down
* September sales down 21 pct in Toronto
By Claire Sibonney
TORONTO, Oct 3 Canada's post-recession property
boom is displaying fresh signs of weakness, impeded by recent
government mortgage-rule changes, with sales volumes dropping
even as average prices rise, industry reports released on
A survey by Royal LePage Real Estate, one of Canada's
biggest real estate agencies, showed that although most cities
experienced modest price appreciation in the third quarter,
fewer homes were sold than in the same period in 2011.
Royal LePage said this suggests a tipping point in the
"A drop in the number of homes trading hands typically
precedes a period of softening house prices," Royal LePage Chief
Executive Phil Soper said in a statement. "Where there is
reduced demand, those who want to sell their homes adjust their
asking price to stimulate interest."
The average price of a resale home in Canada increased 1.8
percent for condominiums and 4.8 percent for detached bungalows
year over year, Royal LePage said.
In Vancouver, which has been Canada's most expensive market,
average prices posted modest decreases, particularly for condos.
In Toronto, average house price gains ranged from 2.7
percent to 5.9 percent, while demand fell modestly. Royal Lepage
noted that multiple offers are still common in the Toronto area,
especially for detached bungalows and standard two-storey homes.
Mindful of the U.S. housing market crash that triggered the
global financial crisis, Canadian Finance Minister Jim Flaherty
in June tightened rules on government-backed mortgages for the
fourth time in four years.
Analysts had expected that the tighter rules implemented in
July would help cool a heated market and curb worrisome levels
of household debt. But some now worry the changes may have gone
too far and there is risk a U.S.-style housing crash.
Some economists have forecast a price correction of between
10 percent and 15 percent, while more bearish analysts see a 25
percent drop in prices, similar to what happened in the 2009
U.S. housing collapse.
Data released last month by the Canadian Real Estate
Association showed existing home sales in Canada suffered their
biggest month-over-month decline in more than two years in
Still, many economists argue that Canada stands to weather a
housing slowdown better than the United States.
"Canada's insulating strengths are excellent strength in
corporate balance sheets including bank capital ratios, and
vastly stronger micro-foundations to its mortgage market than is
the case in the United States and parts of Europe," Scotiabank
economists Derek Holt and Dov Zigler said in a note to clients.
TORONTO SALES DOWN 21 PERCENT
A separate report from the Toronto Real Estate Board on
Wednesday showed the average selling price in Canada's largest
city rose more than 8.5 percent to C$503,662 ($508,749) in
September from the same month last year, but sales were down by
"While sales have been lower due to stricter mortgage
lending guidelines, we continue to see substantial competition
between buyers," board President Ann Hannah said in a statement.
"The months of inventory trend remains low from a historic
perspective, which explains the strong price increases we are
Prices of condos - which have been under the most scrutiny
for evidence of a bubble - rose 8 percent year over year in
September. Sales of condos were down 27 percent year over year
for both the city of Toronto and the Greater Toronto Area.