SmartHomeOwners

TORONTO: Canada's housing market has cooled off from the overheated levels it reached earlier this year when sales were unusually high for the season.

A survey published by Royal LePage on Tuesday said housing prices weakened during the third quarter in most major markets, coming off of unseasonally strong sales in the first half of the year.

The national real-estate sales organization said even though prices are off their lofty highs reached earlier this year, it believes Canada's real estate market is showing signs of returning to normal as some of the uncertainty that plagued markets begins to fade away.

The report said that house price appreciation slowed to five per cent growth over the third quarter of 2009, which marked the beginning of Canada's recovery from a major 18-month recession.

Royal LePage said wild swings in housing activity that were driven by economic uncertainty appear to have subsided as fears of a double dip recession or a housing bubble are set aside.

``In fact, the year is unfolding much as we predicted, with the unusually active first half of 2010 giving way to slower markets in the later part of the year,'' said Royal LePage president and chief executive Phil Soper.

``Helped by very low rates in a competitive mortgage financing market, the third quarter was slightly stronger than anticipated, on new demand fuelled by improved affordability in many regions.''

The survey found that, on a national basis, the average price of a detached bungalow in Canada rose to just over $324,531 in the third quarter _ up 4.6 per cent from a year earlier.

Standard two-storey homes rose 4.4 per cent, to about $360,329, while condominium units increased by 3.9 per cent to just over $226,000.

Royal LePage said local markets like St. John's, N.L., and Winnipeg posted home price increases above the national average, driven by a surge in the population.

Canada's real estate market had been on a rebound over much of the past after sales dried up in late 2008 and hit a multi-year low in January 2009.

The housing market's sudden plunge was sparked by a credit crunch that developed in the U.S. housing and lending industries, and gradually spread across the globe, causing a worldwide recession in the late summer and early fall of 2009.

The domestic real estate market has been much quicker to recover than its American counterpart, in part because of a more stable banking industry, historically low interest rates and improving consumer confidence.

However, Soper said it's unlikely that the Canadian housing market will be able to keep pace with the activity levels of last year's fourth quarter in the final three months of this year, but that some certainty appears to have prevailed.

``We believe much of that volatility has been worked out of the system,'' he said.

``Gradual economic improvement, particularly with our employment picture, offset by the dampening effect of a gradual increase in mortgage costs, should bring a steadier housing industry through 2011.''