Canada's big housing markets in 'Goldilocks moment': Royal LePage

Prices in Canada's five biggest housing markets are going up at a similar, healthy pace the first time that has happened in six years, Royal LePage said Thursday in its latest national house price survey.

The firm said that in the third quarterhome prices in the Greater Toronto Area, Greater Vancouver, Greater Montreal Area, Calgary and Ottawa all went up by between 1.5 and 3.5 per cent from the second quarter.

Royal LePage said those increases are indicative of a "much more balanced" Canadian residential real estate market.

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"Uneven regional economic growth has plagued Canada for much of the past decade, a challenge most evident in the nation's housing markets," said Royal LePagepresident and CEO Phil Soper.

"For the first time since 2011, we are seeing real estate in all five of our largest cities appreciate at a manageable, healthy clip," he said in a release. "Canadian housing is enjoying a Goldilocks moment not too hot, and not too cold."

He said that, for now, the housing markets in Toronto and Vancouver have "returned to Earth." The two cities led the housing market with big price gains and then sharp swings lower, but are now seeing single-digit price growth.

On a year-over-year basis, several of the big markets still reflect big gains from earlier this year. In the Greater Toronto Area, prices in the third quarter were up 21.7 per cent from the same time last year, while Montreal prices were up 14.3 per cent, and Ottawa had growth of 7.9 per cent.

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Calgary prices were up five per cent year-over-year, while Greater Vancouver showed a modest gain of 2.5 per cent after its market correction last year.

Soper said rising interest rates, coupled with a strong Canadian dollar, are helping to keep price increases under control in the country's major housing markets.

"Marginally higher borrowing costs should dampen domestic demand somewhat, and with less currency-adjusted purchasing power, foreign buyer activity is off peak levels and will likely stay that way in the near-term," he said.

Teranet shows monthly decline

In a separate report, theTeranet-National Bankhouse price index in September showed itsfirst monthly decline since January 2016, weighed down by falling home prices in Toronto.

The national index, which factors in prices for 11 cities, dropped by 0.8 per cent from August. Thatdrop was the largest monthly decline since September2010.

The price index for Toronto was down month-over-month by 2.7 per cent. The biggest market in the country has beencoolingoff since the Ontario government brought in measures in April to curb rapidly rising prices.

Asharper slowdown in price inflation isunavoidable, said DavidMadaniof Capital Economics.

"And with interest rates on the rise and mortgage financingrules likely to be tightened significantly later this year, the
worst is still to come," he said.