BY MARIO TONEGUZZI, CALGARY HERALD DECEMBER 20, 2011

CALGARY — Canada’s ongoing housing boom is in its 13th year but showing some signs of cooling, says a global real estate report released Tuesday.

The Global Real Estate Trends report, authored by Adrienne Warren, senior economist and real estate specialist with Scotia Economics, said Canada has been a “notable outperformer” in the housing market compared with nine other developed countries including France, Switzerland, Sweden, Japan, Australia, the United Kingdom, the United States, Spain and Ireland.

“The Canadian housing market remains an outperformer among advanced nations with real home prices up 4.8 per cent year-over-year in the third quarter,” said Warren. “While the sector’s continued buoyancy is impressive, monthly data through November suggest prices have levelled off since the spring, with conditions in the majority of local markets in balanced territory.

“Ultralow interest rates are still attracting buyers, but increased economic uncertainty combined with some recent slowing in the pace of hiring could dampen demand in the new year.”

On Monday, a report by Bank of America Merrill Lynch said Canadian home prices are now showing many of the signs of a “classic bubble.”

“We estimate the housing market nationwide is about 10 per cent over valued,” said the report by economists Ryan Bohren and Sheryl King. “Even so, the only way these valuations can be explained is by the record low mortgage rates. Under more normalized interest rates, home prices would actually look 25 per cent overvalued based on current prices.”

The report said Canada is somewhat shielded from the economic fallout from the European debt crisis but is certainly not “impregnable” particularly if unemployment goes to about eight per cent.

“In our view, the housing market is one of the most vulnerable sectors to this weakening economic environment, showing classic signs of over valuation, speculation and over supply,” said the report. “We are not calling for an all out rout in the market — but caution is now decidedly warranted.”

According to the Canadian Real Estate Association, the average MLS sale price in Calgary in November was $398,722 which was basically the same as a year ago while the Canadian average price grew by 4.6 per cent to $360,396.

In Alberta, the average price of $356,535 increased by 2.7 per cent.

Warren said inflation-adjusted average home prices in Canada have risen by 85 per cent since 1998.

“Canada’s residential real estate boom started several years later than many of its counterparts, with the economy still feeling the effects of the deep recession of the early 1990s and weak labour markets through mid-decade,” said Warren.