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Housing sales in July highest since early 2010

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Canada’s most expensive housing market not headed for crash, says credit agency DBRS

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A leading credit rating agency says Canada’s most expensive housing market may not be all that affordable for the average family, but despite that no major correction is coming Vancouver’s way.

DBRS  looked at 39 markets in Canada, the United States and Australia, releasing its focus feature on Vancouver Wednesday.

“Based on historical data, the Vancouver market does not appear to be significantly overheated,” said DBRS, in the report. “Therefore, a correction of any magnitude may not be justified given the strong fundamentals in the market.”

This month the real estate board of Greater Vancouver said June competition among homebuyers was as strong as it had been since  2011.

Property sales in the region were up 28.9% in June from a year ago while the average sale price of detached home reached $1,200,539.

DBRS acknowledged there are affordability issues and said home prices continue to rise faster than disposable income, “threatening the affordability of housing for many Canadian families” in the market.

DBRS says given the stable economy and the low interest rate environment that could persist for the foreseeable future, it’s hard to envision a correction.

“It is difficult to foresee catalyst that could create a significant price correction in the Vancouver housing market over the medium term,” said DBRS.

In its study, DBRS noted from 1994-1998, Vancouver did have a correction and prices dropped 9% from peak to trough. From 2008-2013, prices increased 1.7% annually through this post recession period. It is over the last year that prices have rebounded with a 9% gain, said DBRS.

The ratings agency also stressed Vancouver has natural barriers that limit development in the city and controlled supply.

At the same time, DBRS says the quality of living in Vancouver is not a factor to be ignored in continued long-term demand.

“Vancouver’s status as one of the Canadian cities with the highest quality of living helps ensure continual population growth, says DBRS. “The city’s diversity and year-round mild weather help attract immigrants, thus keeping demand for housing high.

The agency offered shorter comment on other Canadian cities.

In Calgary, it says a well-paid work force has kept the housing market strong as the city has avoided a worldwide economic recession with its oil and gas economy. DBRS said continued development of new home supply has keep prices stable and it expects more of the same even if the Alberta economy slows down.

In Montreal, DBRS noted its housing price index saw declines from 1990-99 but is up 150% since then. “Housing prices haven’t been strongly impacted by the financial crisis and exhibit a stable, upward trend,” the agency said.

In Toronto, DBRS say restrictions on development allowing it to “expand up but not out” have helped maintain upward pressure on prices.

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Welcome to the world’s most expensive apartment: $440-million penthouse comes with chauffeur, caterer and infinity pool

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Even by the sky-high standards of Monaco, a penthouse at the top of the Odeon Tower is set to fetch a vertiginous price, according to developers.

Tour Odeon, which is under construction and when finished will be the principality’s first skyscraper since the Eighties, will be topped with a five-floor penthouse that would cost a potential owner 300-million euros ($440-million), making it the most expensive in the world.

www.odeon.mcTour Odeon will be Monaco’s first skyscraper since Prince Rainier banned tall buildings on the shoreline

to avoid overshadowing the city.

The penthouse will have several swimming pools, including a large infinity pool with a slide leading from a dance floor in the rooms above.

www.odeon.mcThe world’s most expensive penthouse towers forty-nine stories above Monaco, offering the principality’s latest breed of ultra-wealthy transients a place to flash their bling and still enjoy secrecy.

The 35,000 square-foot apartment will also come with a private chauffeur, a caterer, three staff bedrooms, a 24-hour concierge service and access to a health centre.

Tour Odeon, which will house 36 more luxury flats, will be Monaco’s first skyscraper since Prince Rainier banned tall buildings on the shoreline to avoid overshadowing the city. Instead he encouraged the development of wider, lower buildings built on an extension into the sea. His decision was reversed in 2009 by his son and successor, Prince Albert, and plans for the 560-foot Tour Odeon were drawn up.

www.odeon.mcThe view from a kitchen in an apartment in the Odeon Tower. So far, 26 flats have been sold.

One in three of Monaco’s 38,000 residents is a millionaire, according to a study by Spear’s magazine and WealthInsight.
Irene Luke, of Savills, the estate agency, who moved to Monaco in 1990 from London, said it was becoming increasingly popular with wealthy Britons.

“It’s becoming more and more like London by the sea,” she said.

www.odeon.msThe master bedroom in an Odeon Tower apartment. One in three of Monaco’s 38,000 residents is a millionaire.

Tax changes in some areas of Switzerland are also “making Monaco look like a very safe, stable place,” Miss Luke added.

The penthouse is expected to go on the market next year. So far, 26 flats have been sold.

Tax Season Average Canadian house price up 5% to $401,585, CREA says With Toronto, Vancouver out of equation, average home worth $327,988

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The average price of a Canadian home was $401,585 in July, a five per cent rise compared to last year.

The Canadian Real Estate Association repeated its claim that booming sales in the large, pricey markets of Vancouver and Toronto are skewing the national average higher.

If those two cities are stripped out of the equation, the average Canadian home is worth $327,988 and the year-over-year increase shrinks to four per cent.

• MAP: House prices across Canada

Sales hit a high

The real estate market is going strong, based on the number of houses being sold.

Sales have been climbing steadily — rising slightly for the sixth consecutive month.

July marks the highest level of home sales since March 2010, the agency said. Sales activity was 7.2 per cent higher than the same month a year ago.

Increases in sales activity for July also grew in markets such as Victoria and Winnipeg, and the Ontario markets of Ottawa, London and St. Thomas.

“On the surface, national sales activity in July was similar to what we saw in May and June,” said CREA president Beth Crosbie. “That said, July sales picked up in markets that struggled to gain traction in the spring, while activity eased slightly in some of Canada’s largest urban markets.”

This growth shift from Calgary, Toronto and Vancouver to other regions of Canada could indicate a future trend.

“This could mark the start of less regional diversity in housing markets, which saw strength generally in the Western provinces and weakness in Central and Atlantic Canada (except Toronto),​” Sal Guatieri, senior economist​ at BMO Capital Markets.

“The renewed momentum in Canada’s housing market in recent months represents both a bounce back from weather-related weakness over the winter months and a response to lower mortgage rates,” said Leslie Preston of TD Economics.

“Potential buyers who may have sat on the sidelines last year as interest rates rose, are being enticed back to the market by lower interest rates. Meanwhile, a strengthening in economic growth continues to support the fundamental demand in the housing market.”

Market may cool off

This growth spurt may not last much longer.

TD Economics believes that the Canadian housing market will cool later this year and into the next.

Preston says existing home prices “…are on track to outstrip income growth for a second straight year in 2014, which adds to concerns about an already-overpriced market.”

She adds that a likely increase in interest rates and the added supply of new homes currently under construction are expected to weigh on prices as well.

Until this happens however, Guatieri remains concerned with THE upward climb of prices in Calgary, Toronto and Vancouver.

“While there will always be condos to satisfy the demand for reasonably affordable housing in these cities, the widening gap in prices versus detached homes means that a lot of young, growing families will be forced to live the condo lifestyle for much longer than they intend.”

Vancouver housing data reveal Chinese connection – ask a Vancouver mortgage broker

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The Globe’s Real Estate Beat offers news and analysis on the Canadian housing market. Read more on The Globe’s housing page.

One of the largest real estate companies in British Columbia says that more than one-third of all the single-family detached homes it sold last year went to people with ties to mainland China.

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MARKET VIEW Video: Market view: Does Toronto face a condo ‘supply deluge’? Macdonald Realty Ltd., which has over 1,000 agents and staff in B.C., said 33.5 per cent of the 531 single family homes sold by its Vancouver offices in 2013 went to people who the company said were a mix of recent immigrants and Canadian citizens.

Those buyers, the company added, tended to spend more money, too, with the average cost of a house sold to these clients topping $2-million, compared to $1.4-million on average overall.

The figures did not include Macdonald’s sales in suburban areas such as Richmond, Burnaby or North Vancouver.

“This is our snapshot of Vancouver,” says Dan Scarrow, vice-president of corporate strategy at Macdonald Realty.

The information is based on reports from the firm’s sales, anecdotes from its agents and Mr. Scarrow’s own experience working with mainland Chinese clients, and it’s a glimpse into the influence of mainland Chinese money on Vancouver’s real estate market, which is considered among the most expensive in North America.

Vancouver has been flooded in recent years by tens of thousands of investor-class immigrants from mainland China, who have seen the west coast city as a stable – and picturesque – place to park their capital in luxury property.

That has helped drive up the average price of a single-family home in Vancouver to around $1.2-million.

Mr. Scarrow, who noted the firm does not query buyers about immigration status, believes that investment flowing from mainland China into Vancouver real estate is a quantifiable phenomenon, but has not personally seen much of the more controversial type of buyer: Those from abroad who buy for investment purposes but never live in the city. “We still see very few pure investors from China who have no connection to Vancouver,” he says.

Getting a handle on foreign buyers is difficult and Macdonald’s survey is far from exact – though one major property developer in Richmond said “that sounds about right.” The federal government does not collect meaningful data on the number of foreign buyers purchasing Canadian real estate, leaving industry participants to debate the impact of foreign capital on the local market. And that debate has gotten heated recently, with some developers accusing others of racism and criticizing those who want to slap curbs on foreign investment. The issue is complicated by the fact that some of Vancouver’s ethnically Chinese-Canadian citizens with ties to Hong Kong view newer immigrants from mainland China with a degree of suspicion, assuming their wealth might have been accumulated in part by proximity to China’s Communist Party, rather than in a free market with the rule of law like Hong Kong.

The lack of hard data has also complicated discussions about the city’s affordability crisis and fuelled a local cottage industry where analysts attempt to decipher the scope of foreign money by looking at things like electricity usage in downtown neighbourhoods where some suspect foreign buyers have bought condos in which they never live.

“People always say there are no stats. Well, here are the stats,” says Mr. Scarrow. “This is actual evidence.”

There have been some reports and statistics about the scale of foreign money in Vancouver real estate before, but few have been conclusive – and none have settled the debate. One Sotheby’s report based on a survey of its agents found that 40 per cent of the luxury properties it sold in Vancouver were to foreign buyers – but not all of them were from China. Many developers trying to downplay fears about Chinese investment cite a statistic showing that only 1 to 3 per cent of Vancouver real estate purchases are “foreign” buyers – but, as is the case with Macdonald’s sales, many more expensive homes are still sold to people based here but who have come, at some point, from mainland China. A 2011 study by Landcor Data showed that 74 per cent of luxury purchases in Richmond and Vancouver’s expensive west side were by buyers with mainland Chinese names.

Mr. Scarrow says his company is “indicative of the overall market,” since his firm has some real estate agents who target overseas Chinese buyers, but is also firmly oriented toward domestic sales, unlike other real estate firms that deliberately target Chinese buyers.

At the same time, Mr. Scarrow and Macdonald are so bullish on the potential for Chinese investment that he is spearheading the company’s efforts to open an office in China. “While there is very little data about foreign investors in Vancouver real estate, our own internal data is enough for us to commit to investing in a representative office in Shanghai,” said Mr. Scarrow, whose mother Lynn Hsu, who came from Taiwan in 1979, is the majority owner and president of Macdonald.

Others remain unconvinced – not about whether there is an influx of Chinese money, but whether the flow of foreign capital will continue unabated.

Richard Kurland, a Vancouver immigration lawyer who works with wealthy Chinese immigrants, believes Vancouver may see a slowdown in foreign investment. He said some wealthy Chinese buyers might get anxious and sell off second properties because of the current crackdown on corruption in China.

In meetings with top real estate agents earlier this year, Mr. Kurland predicted that luxury residential real estate could drop in value by as much as 25 per cent as foreign investment dips. As evidence, he points to July real estate figures that showed 106 homes for sale on the west side in the $3-million to $3.5-million price bracket, and just nine sales, compared to 73 active listings and seven sales during July of 2013.

Follow Iain Marlow on Twitter: @iainmarlow

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How parents can help their adult children buy a house- ask a Vancouver mortgage broker

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Where there’s a will, there’s a way for parents to help their adult children buy a house.

That’s will as in last will and testament. In the kind of extremely expensive real estate market we have in many cities, maybe what your adult children need is a sweetheart deal from Mom and Dad. Maybe pass the house down in your will, or sell it at a bargain price to a son or daughter.

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Graham Williams, partner at the accounting firm Stern Cohen, doesn’t think much of this latter idea. “We can’t remember a case where we recommended a client sell their home to their adult children,” he wrote in e-mail. “We hate to disappoint the many millennials out there who are currently priced out of the housing market, but from an accountant’s perspective it might not be a financially sound solution.”

One of Mr. Williams’s objections is that you’re wasting the biggest opportunity of your lifetime to make a big investing gain tax-free. A house, as long as it’s a principal residence, can be sold without having to pay tax. This is an especially important detail if your home has doubled or tripled in value in the decades you’ve owned it.

Another objection from Mr. Williams is that parents often need to maximize the proceeds from selling their home in order to downsize to a condo and perhaps have some money left over. One further objection is the family dissension that can be created when parents offer a sweetheart deal on the family home to one child and not others.

But, if you were so inclined, is it possible to help an adult child deke around high house prices by selling her the family home at a below-market price? Mr. Williams said the answer is yes, while offering up an alternative: Sell the house on the open market, downsize and then use some of the leftover money (if any) as a gift to the children. “There’s no gifting tax in Canada, so you can give cash to your kids – as much as you want,” he said in an interview.

Alternatively, if you do help your kids with a down payment for a house, consider designating the money as an interest-free mortgage that must be repaid when the home is sold (you can always forgive the loan if you want). Mr. Williams suggests consulting a family lawyer on this. The goal is that your gift won’t be considered matrimonial property if your adult child divorces his or her spouse.

This measure also gives parents some control if their adult kids unwisely sell their house to move up to something more expensive. “Basically, it means that if they sell the house, your kids have to pay you back the money you gave them,” Mr. Williams said.

Another thought: Pass your house down to your adult children in your will. Mr. Williams said a house would be considered as sold at fair market value on the death of the owner if willed to children directly or as beneficiaries of the estate. Even so, a home that is a principal residence would be exempt from tax in this situation.

Probate fees – they’re charged by provincial governments and cover the cost of validating a will – are likely to be triggered when including a home in a will, said Lucinda Main, a trust and estate lawyer with Beard Winter LLP. Probate fees are nominal in some provinces, but Ms. Main said in Ontario they would amount to $7,000 on a $500,000 house.

This explains probate-avoidance manoeuvres such as adding an adult child’s name on the title of a home. Ms. Main said an arrangement called joint ownership with right of survivorship is commonly used with spouses so that if one partner dies, the house automatically transfers to the other without probate. In turn, the surviving spouse might put her daughter jointly on title. The goal: A seamless transfer of the house to the daughter on the parent’s death, with no probate fees charged on the value of the house.

Ms. Main said she’s not a huge fan of parents and adult children owning a home jointly because of the potential complications. If parents want to sell or mortgage the house, they need the consent of their children. Also, the house could get caught in bankruptcy proceedings or a marriage breakup involving the children.

Adding one child on the title of your house presents fairness issues as well, Ms. Main said. “If you have one child on the title of a property, how do you deal with the other children? Do you try and equalize things in the will?”

Finding a way to transfer a house from parents to adult children is tricky for sure. But then, so is affording a home in today’s extremely expensive market.

Follow Rob Carrick on Twitter: @rcarrick

Five signs you are ready to take the home-buying plunge

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It may seem obvious, with today’s low interest rates, high rents and a strong housing market: If you’ve got the money, buy now.

But how to know when you are truly ready to make the leap?

Not everyone who would like to buy is actually prepared, financially and emotionally. Real estate experts have recognized signs that indicate when someone is, and meeting those criteria can make the difference between frustration and success.

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You’re taking financial steps

The first sign, of course, is the financial foundation upon which a potential buyer can build.

“If they have already started saving toward a down payment, that is a great sign,” said Jeffrey Baker, a real estate agent with Sutton Group in Montreal. “They have either been saving aggressively over a certain length of time and given themselves a target for the amount that will be their down payment. Or they will have had a meeting with a financial adviser or bank, who has shown them the amount they can realistically spend.”

They also should meet with a mortgage broker and gain pre-approval. Although, as Austin Keitner of Keller Williams Realty in Toronto pointed out, “pre-approval doesn’t mean they’re actually looking at your credit rating but asking questions about your income, expenses and getting to know your ratios a little bit.”

A buyer may not get the final approval if his or her credit rating is not up to snuff. But, nonetheless, “if they don’t have that done by the time they are talking to me, I encourage them to do that. Especially in this market, you want to be ready. You want to be able to act fast,” Mr. Keitner said.

You are plotting your spending

Ability to budget is key. “A well-educated first-time buyer needs to know their budgets to know where they stand,” said Russell Westcott, vice-president of Vancouver-based Real Estate Investment Network.

The move itself as well as the fees and taxes and the costs of properly maintaining a house can add considerable amounts to the down-payment and mortgage. Apartment dwellers might not think about these expenses. Whether it’s a lawn mower or a new roof, Mr. Westcott said, “they have to figure out how much their housing expenses are going to be.”

Does the new house need renovations? “As a general rule, renovation projects will take three times longer than you thought they would,” Mr. Baker said, “and cost at least twice as much as you had budgeted.”

You know what you want

Is it a condo, a townhouse or a big, fully detached home? You should decide that before you start browsing the listings.

“Until you have looked at your budget, and talked to your mortgage broker, you can’t really even determine what type of property you should be looking at,” Mr. Westcott said. “And, does it fit with your lifestyle?”

Knowing the neighbourhood where you want to be is another part of that process. It may be trendy or offer great views, but does it mean a longer commute to work, for example, or have the services – schools, supermarkets and transport links – you need?

“The buyer should ideally know what community they want to be in,” said Mr. Keitner, who has on occasion been asked by clients whether they can lease a property for a year, instead of buying it outright, to see whether it’s the right fit for them.

Otherwise, your location choice might come back to bite. “If you end up leaving the house after a couple of years, you’re going to lose money on it,” he said. “Because after your moving costs, legal costs and so on, its sale is not going to compensate you through market growth.”

You know what you actually need

For Mr. Westcott, the fourth sign that new home buyers are ready to make a serious commitment is when they have “put the focus on what they need, not what they want. Three bedrooms, two bathrooms and an attached garage – those are needs,” he said. “A want would be high-end fixtures, granite countertops or a wine cellar.”

Would-be buyers are sometimes seduced by the “bling,” he added, “and all of a sudden the budget gets thrown out the window.”

Conversely, ignoring properties that meet all your needs but not your whims will only make the already complicated process of buying a new home more challenging.

You have tempered your expectations

The final sign you are ready to take the big step is when you realize that, as Mr. Keitner put it, “there is no such thing as a perfect house. I’ve never really seen a eureka moment where it’s, ‘Oh my God, this is the place where I need to live.’” Rather, he said, the home you buy and make your own becomes the home you love.

“You have to be prepared, as a first-time homebuyer, to temper your expectations,” Mr. Westcott agreed. “You are not going to get what you want and, if you are young, you’re not going to get the style and the quality of living that your parents have.”

What’s more, Mr. Keitner said, “there’s a risk that if people don’t act on properties that they can make work, prices continue to go up. So a decision based on emotion, rather than practicalities, can cost tens of thousands of dollars.”

However, losing a home that, in retrospect, would have been the right buy is also part of the education of home buying.

“My experience with first-time buyers,” Mr. Baker said, “is that they have to live the experience of a place getting away from them to realize that sometimes the market won’t wait for them.”

Buying your first house is probably one of the most difficult decisions you will ever make. But understanding the signs of the well-prepared homebuyer will go a long way in ensuring that it’s the right one.

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Pockets of risk in Canada’s condo market but don’t expect a crash, Conference Board report says

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Pockets of risk continue to exist in the condominium markets of Toronto and Vancouver, but a broad-based downturn is unlikely, according to the latest Conference Board of Canada condo report commissioned by Genworth Canada.

Genworth is the largest private mortgage insurer in Canada.

Toronto’s condo market is expected to “cool slightly but avoid the collapse many fear due to healthy population growth, a solid economy and the desirability of downtown living,” the report says.

Vancouver’s condominium market is recovering along with the overall resale market, although slowing offshore demand “threatens to expose to area’s poor housing affordability.”

Robin Wiebe, senior economist at the conference board’s Centre for Municipal Studies, and co-author of the summer report, said “strong” underlying economic factors would help most condominium markets experience a soft landing.

Increases in average household incomes, for example, would help to keep mortgage costs affordable despite expected modest price gains over the next two years in all eight cities studied in the report.

“Continued growth in immigration, affordability pressures in major cities, and aging baby-boomers looking to downsize are all factors that support continued demand for condominiums in urban centres,” Genworth said in a statement.

Canadian housing to start showing signs of easing over next two years, says CMHC

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OTTAWA — Canada’s housing market may start showing some signs of easing over the next two years as new construction begins to slow and sale prices climb down slightly, according to the latest forecast by the Canada Mortgage and Housing Corp.

The national housing agency is forecasting housing starts in Canada to range between 179,600 and 189,900 units in 2014 on an annual basis, dropping to a range of between 163,000 and 203,200 units in 2015.

“Recent trends have shown an increase in housing starts, which is broadly supported by demographic fundamentals,” said Bob Dugan, chief economist at CMHC.

“However, our latest forecast calls for starts to edge lower as builders are expected to reduce inventories instead of focusing on new construction,” Dugan said Wednesday.

The third quarter outlook also says that Multiple Listing Service sales are expected to range between 450,800 and 482,700 units in 2014, with an average price of between $394,700 and $405,700.

In 2015, the CMHC says Multiple Listing Service sales are expected to range from 455,800 to 502,900 units, with and average price of $396,500 to $416,900.

“It certainly seems like the soft landing picture is unfolding,” said Benjamin Reitzes, a senior economist with the Bank of Montreal.

“Housing has remained resilient despite continuous calls for prices to collapse, or sales to collapse or condos to collapse. Sales have remained consistently strong and you’ve also seen construction remain consistently strong pretty much to everyone’s surprise.”

Sales should begin to slow down next year as interest rates begin to rise, which will lead to construction slowing down as well, he said.

Construction is currently at about 200,000 units on an annual basis, Reitzes said, but should go down to between 180,000 and 190,000 to avoid oversupply.

When it comes to pricing, he added, a lot depends on what market home buyers are in.

“You have a hot market in Toronto, a solid market in Vancouver and a very hot market in Calgary. Those are the areas that are really driving price gains throughout the country,” he said.

In its forecast, the CMHC said housing starts in the Prairies are projected to increase to 52,900 units in 2014 before moderating to 50,800 in 2015, as net migration to that part of the country is expected to decline from the record achieved in 2013, as is employment growth.

Ontario housing activity will regain momentum through the course of 2014 before easing later in 2015, with housing starts in that province ranging between 50,900 and 63,300 units over the next two years.

Quebec housing starts are expected to amount to 38,400 units in 2014 and 38,700 units in 2015, as moderate economic and employment growth will hold back demand for existing and new homes.

In Atlantic Canada, housing starts are expected to decline close to 14% in 2014 and a further 3% in 2015, amid a slowdown in economic growth.

Earlier this week, CMHC said in its monthly update that housing starts increased to a seasonally adjusted annual pace of 200,098 in July, a slight increase from 198,665 in June.

It was the fifth consecutive monthly increase in new housing construction, with gains in urban starts were concentrated in Ontario and Atlantic Canada, while the Prairie provinces and Quebec all recorded declines. There were also modest decreases in British Columbia.

On Wednesday, the Teranet National Bank National Composite House Price Index reported home prices were also up in July, rising 1.1% from the previous month and exceeding the historical average for July. The index measures price changes for repeat sales of single-family homes.

A separate condo report commissioned by Genworth Canada, also out Wednesday, found that population, economic and employment growth all point to a stabilizing of the Canadian condominium market, suggesting that while pockets of higher risk still exist in Toronto and Vancouver, a broad-based downturn is unlikely.

Canadian home prices rose in July by more than usual: Teranet

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TORONTO — Canadian resale home prices rose in July and the pace of 12-month price appreciation accelerated, the Teranet-National Bank Composite House Price Index showed on Wednesday, adding to strong housing starts this summer to signal a market that continues to be robust.

The index, which measures price changes for repeat sales of single-family homes, showed national home prices rose 1.1% from June, exceeding the historical average for July.

Prices were up 4.9% from a year earlier, a pickup from June’s 4.4% price gain.

The price increases, on top of strong housing starts data released earlier this week, have surprised economists who have been calling for a slowdown in Canada’s long housing boom.

Canada escaped the U.S. housing crash that accompanied the 2008-09 financial crisis, and home prices have risen sharply, if not steadily, over the past five years despite moves by the federal government to tighten mortgage lending rules.

A separate report on Wednesday from Canada Mortgage and Housing Corp (CMHC), the federal housing agency, predicted a gradual slowing for the market as buyers mop up excess supply before builders start new projects.

“Recent trends have shown an increase in housing starts, which is broadly supported by demographic fundamentals,” CMHC Chief Economist Bob Dugan said in the report. “However, our latest forecast calls for starts to edge lower as builders are expected to reduce inventories instead of focusing on new construction.”

The CMHC said housing starts will be in a range of 179,600 and 189,900 in 2014, with a point forecast, or most likely outcome, of 184,800 units, down from 187,923 units in 2013. That is up from CMHC’s May estimate of 181,100 units.

The agency said there will be 163,000 to 203,200 units started in 2015, with a point forecast of 183,100 units, also an upwardly revised forecast.

The CMHC forecast for the average price calls for a 4.5% gain to C$399,800 ($366,084) in 2014 and a further 1.8% gain to C$406,800 in 2015.

The Teranet data showed prices rose in July from the month before in 10 out of 11 cities, led by a 3.5% gain in Victoria, a 2.0% gain in Ottawa and a 1.8% gain in Toronto.

Prices were down 0.1% in Winnipeg.

Year-over-year price gains were seen in seven of the 11 cities surveyed.

Compared with a year earlier, prices were up 8.2% in Calgary, 3.7% in Edmonton, 7.1% in Hamilton, 1.5% in Montreal, 6.6% in Toronto, 6.1% in Vancouver and 2.5% in Victoria.

Prices compared with a year earlier were down 1.2% in Halifax, 0.1% in Ottawa, 1.2% in Quebec City and 0.1% in Winnipeg.

© Thomson Reuters 2014