If you ask many Canadians about real estate, they will say that Canadian homes are indeed overvalued. According to a ratings agency in the United States, the market for real estate here in Canada may be as high as 20% overpriced.
Fitch Ratings has sounded the alarm on overall home prices in Canada. The warning from this company was presented Wednesday following the release of the compensated index for house pricing in June by the Teranet-National Bank. It showed rising home prices across the country.
This June, prices were up by 4.4% over last year's numbers while they rose 0.9% on a month over month basis. While this was the lowest price to be seen on a year-over-year basis within the last six months, it's still higher than Canada's income growth and the inflation level.
Here in Calgary, prices went up by 8.1% over last year's figures. Hamilton saw a rise of 7.3% while Vancouver and Toronto saw home prices climbing by 6.1%. On the other hand, some of the major centres in Canada saw home prices fall. In the Ottawa-Gatineau region, prices went down by 1.7% on a year over year basis, Halifax went down by 2.5% and there was a 2.4% drop in Québec city.
In Calgary, the price increases are reflecting the above average wages in the city. With overall net migration estimated to be approximately 26,000 in 2014, there will be no shortage of new residents that will be looking for housing.
In June, the average price for a Calgary home was $492,000, which was a price rise of 5.5% when compared to June 2013. While this average price is a lot higher than what can be found in other cities, Calgary still remains very affordable when compared to other major Canadian centres. In fact, according to TD Economics, Calgary rates at 17.3% on the Housing Affordability Index, which is 10% lower than it was in 2008.