Condo prices, demand to grow, new report says
By Sunny Freeman, The Canadian Press, With Files From The Ottawa Citizen
A new condo report suggests first-time buyers, retirees and population growth will continue to fuel demand and price growth for the compact living spaces over the next few years.
The study by Genworth Canada found that average condo resale prices are expected to rise next year in seven of the eight metropolitan centres studied. The report covers only apartment-style condos in all but the Quebec markets, where all forms of condos were included.
Prices in Toronto are projected to jump 2.5 per cent to $312,352. The highest in-crease however, is expected to be in Edmonton, where prices could rise 3.2 per cent.
Ottawa prices are fore-cast to rise by 1.8 per cent to an average $283,606 in 2013, after a much larger gain this year.
Vancouver is the only city where condo prices are expected to drop, by two per cent to $348,152.
The report stands in contrast to warnings from economists and officials that the condo market in some hot markets is reaching bubble territory that could soon burst.
The Bank of Canada and federal Finance Minister Jim Flaherty have cautioned Canadians repeatedly to moderate borrowing on real estate, declaring household debt to be the domestic economy's No. 1 enemy.
The central bank noted certain segments of the housing market that have a persistent oversupply - such as condos in Toronto - face a higher risk of a price correction.
Genworth, which earns revenue from selling mortgage insurance, notes that rising prices for single-detached homes are driving first-time buyers to condos, but retirees also continue to prop up demand.
It suggests that the population is expected to grow in all eight cities studied over the next few years, while employment growth and low interest rates should also support the market. The numbers also indicate Canadians are flocking to urban centres. Toronto's population jumped more than 17 per cent over the previous census period in 2006.
Article from: The Ottawa Citizen