Real Estate
ACROSS THE NATION

Canadian home price
Increases vary widely

RESIDENTIAL HOUSING
Prices in Canada reflect a
wide range of regional dif-
ferences that are typical of
the Canadian mosaic.

In cities like Toronto,
Montreal and Winnipeg,
price increases are setting
all-time records. At the other
end of the scale, the markets
in centres like Ottawa and
Halifax are, at best, stable.

According to the Royal
LePage Survey of Canadian
House Prices released
recently, Toronto and
southern Ontario have seen
the highest house price in-
creases in the country, often
exceeding 30 per cent for
many types of housing. In
Alberta, with higher oil
prices, Edmonton and
Calgary appear to be starting
anolnei-comeback.

A genera! healthy
economy, interest rates that
are the lowest in over a de-
cade, and relatively high
levels of consumer con-
fidence have combined to
create strong resale housing

_ Markets in most parts of
-Canada,’’ says Ozzie
Jurock, president, Royal
LePage Residential Real
Estate Services. ‘‘Except in
areas with special local in-
fluences like Ottawa and
“certain Atlantic communities,

. prices have been increasing

jn direct proportion to de-
mand.”". "

~“*Jurock’s comments coin-

-cided with the release of the
April issue of the Royal

LePage Survey of Canadian
House Prices. The quarterly
cross-Canada study tracks
the estimated selling price of
six categories of housing in
over 170 communities from
coast to coast.

The sky appears to be the
limit for house price in-
creases in Toronto and
southern Ontario, as the ex-
ceptional market that char-
acterized 1986 appears to be
continuing into 1987. The
upward pressure on house
prices has spread to com-
munities on the fringe of the
Toronto commutershed, like
Hamilton, Barrie and
Oshawa.

Jurock cautions, however,
that ‘‘nothing continues up-
wards in a straight line for-
ever,’” indicating that..the
large price increases in the
area cannot continue in-
definitely.

Montreal and Winnipeg
are not far behind Toronto
in terms of house price in-
creases, although the mar-
kets in these two areas are
much more reasonable. In-
creases in housing values in
excess of 20 per cent are not
uncommon in the Montreal
area, while Winnipeg has
seen prices rise in the 10 to
20 per cent range.

Vancouver is enjoying one
of the healthiest real estate
markets in years. With
strong demand balanced by
a relatively good supply of
homes listed for sale, it has
produced selling price in-
creases:in the 10 per cent
range. In some parts of the

STATISTICAL STUDY

Resale home loans|

jump

LENDING ON resale resi-
dential properties has accel-
erated dramatically over the
past few years to a point
where it has now become the
dominant force in the resi-
dential lending market.

A Statistical study by

Canada Housing and Mor-.

tgage Corporation shows
that after a slight decline in
1982, the growth in loans for
-resale homes has been rising
steadily and by the end of
1985 accounted for 80 per
cent of all mortgage loans.

The pattern of lending on
new housing remained rela-
tively flat over time,
reaching a peak in 1977 of
about $6 billion, At the end
of 1985, it stood at approx-
imately $5 billion. This seg-
ment of the mortgage mar-
ket is expected to change
very little over the next few
years.

What has changed
significantly is the source of

residential mortgage funds.
The biggest is seen in the
dramatic decline in the in-
fluence of insurance com-
panies and the increase in
the importance of chartered
banks. :

In 1957, insurance com-
panies accounted for 46 per
cent of this market. In 1985,
its share had declined to six
per cent.

In comparison, the banks
increased their share from 26
per cent to 48 per cent over
this period.

Since 1954, when the Na-
tional Housing Act was in-
troduced, NHA-insured
mortgage, held stable at
about $500 million until the
Mate 1970s. Conventional
mortgage lending over the
same period displayed slow
but steady growth — from
$1 billion in 1960 to $2.3
billion by the early 1970s.

For new housing foans,
the NHA share of the mar-

city, however, thzre are signs
of a seller’s suarket develop-
ing.

Ottawa, which continues
to be beset by uncertainties
in the federal civil service,
has been relatively stable for
the past year, although here
are signs of a stronger resi-
dential housing market
beginning to emerge.

Except for New Brunswick
communities like Moncton,
Saint John and Fredericton,
where house price increases
continue to outpace infla-
tion, residential values in the
Atlantic provinces have re-
mained relatively stable over
the past year.

’ Jurock notes that the
lowest interest rates in 15
years have contributed to the
strong housing demand, but
expresses concern about the
predominance of short-term
mortgages in the marketp-
lace. ‘‘With five year rates at
9% per cent, | would rest a
lot easier with a longer term,
rather than gambling on a
six month or one year
term,”’ he said.

Resale housing values
quoted in the Survey of Ca-
nadian House Prices repre-
sent the estimated current
market value of typical
homes and are compared to
figures reported three mon-
ths ago and a year ago. The
prices cited are Royal
LePage opinions of fair
market value in each loca-
tion based on data and mar-
ket knowledge provided by
Royal LePage residential
real estate specialists.

dramatically

ket has varied from a high of
73 per cent in 1955 to a low
of 25 per cent in 1966. Since
the mid-1960s, the NHA
share has stabilized at
around 45 to 50 per cent
Tange.

The study also showed
that the majority of bor-
rowers — about 50 per cent
— making use of NHA mor-
tgage loan insurance were in
the middle third of the in-
come scale. This pattern has
remained relatively stable
over the history of NHA.

In 1975, two out of every
three NHA borrowers of
new housing loans made
down payments of less than
JQ per cent. In 1985, NHA-
insured loan limits were
reduced to 90 per cent from
the previous maximum of 95
per cent. This change, the
study noted, was in keeping
with the trend by borrowers
to reduce their overall mor-
tgage debt.

986-1901

61 - Friday, June 5, 1987 ~ North Shore News

a

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921-8046

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