“People don't buy houses based on their sticker price. They buy them based on their monthly cash outflow,” said Phil Soper, president and chief executive of Royal LePage Real Estate Services. “So, principal, interest, taxes, utilities – they take that together and they say, ‘What can we afford?' ”
Across Canada, average house prices are forecast to increase by 3 per cent to $348,600 in 2011, according to the Royal LePage House Price Survey and Market Survey Forecast released Thursday.
Winnipeg, however, is expected to eclipse that national average by posting a 7-per-cent gain this year. That easily outpaces the 3.7-per-cent increase expected for Vancouver and the 1-per-cent gain forecast for Toronto.
“It [Winnipeg] is the Canadian poster child for a well-diversified economy,” said Mr. Soper, adding the key drivers include agriculture, resources, manufacturing and public-sector employment. “They are not a one-trick pony like Calgary or St. John's, where you see really dramatic upswings, but a really solid reliable economy over the last decade and affordable home prices.”
Adrienne Warren, senior economist with the Bank of Nova Scotia, said the Winnipeg housing market remains “tight” in terms of supply. A positive population trend and strong demand will push prices higher.
Ms. Warren also expects the housing market in Regina, Saskatoon and St. John's to outperform this year. While Scotiabank does not have specific forecasts for those cities, it is expecting an average national price increase of 2 per cent for 2011.
Royal LePage, meanwhile, is forecasting Regina's home prices to rise by 5 per cent in 2011. While it does not provide precise predictions for St. John's and Fredericton, it contends “strong demand” will bolster home values in those cities.
Further west, average home prices will increase by 5.4 per cent in Calgary and 3.3 per cent in Edmonton, largely fuelled by the rebound in Alberta's energy sector.
“We think the baton, in terms of growth leaders, is being passed to the Prairies,” said Pascal Gauthier, a senior economist with TD Economics. “So when I look at Winnipeg, Regina, Calgary, Edmonton with the higher sales and higher price forecasts … that kind of ranking is actually consistent with our view.”