By Tara Perkins

Published on Jan. 08 2013, by The Globe and Mail

Real estate agency Royal LePage expects Canada’s housing market to go through a mild correction in coming months, but is predicting that the average national home price will be 1 per cent higher by the end of this year.

It believes sales in the first half of this year will be slower than last year, tempering the pace at which prices have been rising.

Fewer home owners listed their properties late last year as more potential buyers moved to the sidelines, Phil Soper, chief executive officer of Royal LePage, said in a press release. The slowdown in listings kept inventory levels lower, and supported home values, he said.

The real estate agency said that it saw the price of standard two-storey homes rise 4 per cent year-over-year in the fourth quarter to $390,444, while the national average price of condominiums sold increased 2 per cent to $239,374.

It expects the year-over-year declines in sales that characterized the latter part of 2012 to continue into this year. Sales volumes should improve a bit in the third quarter, becoming essentially flat when it comes to year-over-year comparisons, and then show year-over-year growth in the final few months of the year, the real estate agency forecasts.

It added that it believes “fears of a sharp or drawn out collapse are unwarranted. With economic fundamentals such as employment levels improving, we expect this cyclical correction to be short-lived,” Mr. Soper said.

And he noted that there are regional variations.

“Some housing markets, such as those in Alberta and Saskatchewan, are poised to expand significantly in 2013,” Mr. Soper said. “We will see a decline in unit sales and a flattening of home prices in our largest urban markets of Vancouver and Toronto and that will have a significant dampening effect on reported national averages.”

Royal LePage is predicting that the average house price in Vancouver will decline further by 3 per cent this year, while most areas of the country will squeeze out small price increases. Gains will be larger in Calgary (2.5 per cent) and Regina (4 per cent), it predicts.

It expects average prices to rise by one per cent in Toronto, but that is an average of a stronger market for single-family homes and a softer market for condos.

The real estate agency added that some first-time buyers have been sidelined by new federal mortgage insurance rules that took effect last summer, which, among other things, cut the maximum length of an insured mortgage from 30 years to 25. But the cost of mortgages is still at historical lows, and first-time buyers are adjusting by choosing cheaper homes or saving longer, it said.