From Winnipeg Free Press, by Murray McNeil, January 11, 2012.
WINNIPEG’S Goldilocks housing market is showing no signs of being gobbled up by the big, bad wolf.
Although a growing chorus of experts predicts overheated housing markets like those in Vancouver and Toronto could be in for a fall in 2012, year-end housing reports issued Tuesday show Winnipeg’s robust market is showing no signs of slowing.
Not only was 2011 the second-best year on record for MLS (Multiple Listing Service) sales (13,065), it was the best year since 1989 for singlefamily housing starts (2,002) and the second best since 1988 for multiplefamily starts (1,329).
And last month was the best December ever for both MLS unit sales — up seven per cent to 698 — and dollar volume of sales — up 19 per cent to $182 million.
“As the year progressed, it became evident momentum was on our side and it carried us all the way through to a record dollar-volume year and a near miss on achieving a new benchmark for sales,” said Ralph Fyfe, Winnipeg Realtors’ outgoing president.
Even house prices continued to rise at a higher-than-expected clip, with the average MLS selling price for a detached home climbing by six per cent to $256,748. That’s triple what the WR’s residential market analyst, Peter Squire, was forecasting at the start of 2011.
The only ones who didn’t find anything to cheer about were the city’s beleaguered renters, who are grappling with historically low vacancy rates — 1.1 per cent in Winnipeg as of last October — and average rent increases of 4.6 per cent in the past year.
Canada Mortgage and Housing Corp. said there were five more rental units started last year than in 2010 — 812 versus 807. That won’t do anything to ease chronically low vacancy rates.
While Squire and CMHC are anticipating another strong year for Winnipeg’s housing market in 2012, others see tougher times ahead for Canada’s market. Some analysts have noted Canadian households are already at record high debt levels, and the growth of both jobs and income has stalled. And that could dampen the demand for houses in 2012. The heads of some of Canada’s biggest banks told a banking conference on Tuesday Canada’s robust housing sector could be at risk in 2012.
Gordon Nixon, president and CEO of Royal Bank, said the Canadian market could be headed for a slowdown, led by Vancouver and Toronto.
“When you look at the condo side there is probably vulnerability... it is the area which is most vulnerable with respect to Canadian housing,” Nixon said.
His remarks came as CMHC data showed Canadian housing starts rose more than expected in December to 200,200 units, with condos in Toronto and Atlantic Canada leading the charge.
Squire and CMHC senior market analyst Dianne Himbeault said a correction isn’t in the cards for Winnipeg in 2012.
Rather, they’re predicting performance similar to 2011.
TD Economics’ most recent forecast said Winnipeg house prices are overvalued by nearly 10 per cent and are in line for a modest correction — 0.8 per cent this year and 1.4 per cent in 2013. But Squire said that’s crying wolf.
“We still think we have some good indicators and strength in our market that will carry over into 2012,” he said.
— with files from The Canadian Press
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