After many false calls, there is now convincing evidence that Canada's housing market has come off the boil, according to the latest Real Estate Trends released today by Scotia Economics. Home resales in Caledon and other areas, having fallen for four consecutive months, are running about 15 per cent below last summer's historic peak. Average annual home price appreciation has eased back into the mid single digits, as overall market conditions come into better balance. Adjusted for inflation, the average resale home price in Canada registered its first quarterly decline in seven years in the first quarter of 2008.

According to the report, cracks are appearing on the new home front as well. While housing starts in early 2008 are essentially tracking last year's elevated levels, demand for new residential building permits has fallen sharply. Price increases for new homes are moderating, while inventories of unsold new homes are trending higher.

"We expect overall sales volumes in 2008 to total about 15 per cent below last year's record levels, and home prices to increase on average by about five per cent," said Adrienne Warren, Senior Economist, Scotia Economics. "Price gains should slow further in 2009 with the return of a balanced market for the first time in a decade. Meanwhile, housing starts are projected to gradually moderate, returning toward underlying annual household formation levels of around 180,000 by the end of the decade, from the current 225,000 unit range."

The report also states that the cooling in overall activity is most notable in many of Canada's hottest urban housing markets in recent years, including Calgary and Edmonton. Both centres have officially moved into buyers' territory as soaring prices weaken demand and fuel new listings. More generally, however, economic conditions continue to favour the resource-rich markets in the West over manufacturing-dominated centres in Central Canada. Regina and Saskatoon are currently in the strongest sellers' position nationally, supported by good affordability, rising population inflows and tight supply.

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