TORONTO — The average price of a home rose between 1.8 and 4.8 per cent in the third quarter of 2012 compared to the same period last year, according to a survey by Royal LePage.
It says the cost of an average two-storey home in Canada increased four per cent to $403,747, while detached bungalows rose 4.8 per cent to $366,773.
Standard condominiums saw an increase of 1.8 per cent to $243,607, and while most cities experienced modest price appreciation in the quarter, fewer homes were sold compared to the same period in 2011.
Royal LePage says fewer homes trading hands typically precedes a period of softening prices, and where there is reduced demand, home sellers adjust their asking price to stimulate interest.
Company president Phil Soper says changes to mortgage regulations, which took effect on July 9, accelerated the correction.
In July, the federal finance ministry said the maximum amortization period for insured mortgages would be reduced to 25 years from 30 years.
It was the fourth intervention in the mortgage market in just four years and the most impactful. Potential first-time buyers, which in a typical market represent one third to one half of all purchase transactions, felt the changes immediately.
“While hard-hit in the short-term, first-time buyers will adjust to tougher mortgage qualifications,” said Soper.
“The dream of home ownership is very much alive among young Canadians. They may remain renters for sometime as they save; some will opt for less desirable neighbourhoods and some will purchase smaller homes.”