Victoria’s average house prices up in Q2

Canadian Mortgage Broker News
| Thursday, 8 July 2010

Victoria home prices during the second quarter rose, but the large inventory, particularly for condominiums, is driving prices down, a recent survey has found.

If the number of sales continues to stall in the city, along with the rest of the country, prices could level out, according to the Royal LePage House Price Survey and Market Survey Forecast released on July 7.

“Homes are generally selling below asking price, and significantly so in some condominium cases,” says Carol Geurts, of Royal LePage Coast Capital Realty. “It appears prices may have reached a plateau for the moment, in that much of the price growth we expected for 2010 has already happened.”

During the second quarter, prices were up year-over-year in all housing types included in the Victoria survey. Detached bungalows averaged the highest prices, rising by 11.6 per cent and selling for an average of $520,000 in the second quarter.

Next, standard two-storey homes sold for an average of $483,000, up 8.3 per cent over last year.

However, the average price of a standard condominium dropped to $280,000 since the start of the year, even though it was up 1.8 per cent over last year’s second quarter average.

Many observers agree that the number of sales is down because of the large inventory and tighter requirements for mortgage qualifications.

“Most of the pent-up demand has dissipated from the market,” says Geurts. “There’s a lot of product to choose from, allowing buyers time in making their buying decisions. There’s also some confusion about the HST, so people are waiting to see what the overall effects of the implementation will be.”

The real trouble is with the volume of sales, which dropped from 20 to 25 per cent over the same period last year. But that’s not to say well-priced, high-end homes in desirable areas are not receiving significant buyer attention.

This mirrors Royal LePage’s national forecast announced yesterday that Canada’s residential real estate market will start to slow in the second half of 2010 after two quarters of strong price appreciation and sales activity.

“We have seen an unusual pattern of activity in the housing market over the past 12 months, with the market experiencing a surge of activity and price increases that peaked in the fall of 2009 rather than spring. Early 2010 has followed a more typical seasonal pattern with prices and activity peaking in the second quarter,” said Phil Soper, president and chief executive of Royal LePage Real Estate Services. ”

Most observers agree that the decline of activity is the result of significant regulatory and financial industry changes that affected homebuyers over the same period, including an increase in interest rates in the spring, tightening of mortgage lending rules for first-time homebuyers and investors, and the lead up to the introduction of the HST in British Columbia and Ontario.