House prices expected to slip nationally: Royal LePage

The Canadian real estate market is headed for a "correction" and not a crash this year, with average prices across the country expected to decline by three per cent, Royal LePage said Tuesday.

The real estate firm said in its annual forecast that the resale real estate market should see only "modest" price and unit sales corrections.

Market forecast Market Price change in 2009 (%) Forecast 2009 Price Price change in 2008 (%)Canada-3.0$295,000-1.1Halifax1.0 $234,3007.2Montreal-1.0$254,4004.3Ottawa0.0$291,0006.6 Toronto-4.0$364,0000.8Winnipeg4.0$204,90020.5 Regina6.0$243,30038.6 Calgary-1.0$402,000-1.9 Edmonton0.0$333,000-1.7 Vancouver-9.0$540,1004.0

The national average house price is forecast to dip from $304,000 in 2008 to $295,000, while transactions are projected to fall to 416,000, a decline of 3.5 per cent.

Despite the cooling trend, the firm said some price and activity gains are anticipated in a few provinces.

"While Canada's housing market is anticipated to continue to move through a period of adjustment over the next six months, we should expect modestly lower home prices, not a U.S.-style collapse, which was brought on by a structural failure of the entire American credit system," said Phil Soper, the president and chief executive of Royal LePage Real Estate Services.

"Most consumers are not aware that nationally, Canadian housing market activity peaked in 2007 and has been adjusting lower since. We are well into this inevitable cyclical correction," Soper said.

Royal LePage said that in some mid-sized cities, such as Regina and Winnipeg, where home prices remain below the national average, prices are expected to increase moderately this year.

The most significant decreases are forecast for Canada's most expensive city, Vancouver, which has experienced above-average price increases for most of the decade.

Markets in cities in Ontario that are reliant on the manufacturing sector are projected to experience greater-than-average declines in prices and activity, while the markets in Montreal and Ottawa are expected to remain stable, with relatively flat prices.