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Brief surge in Canadian property prices welcomed

The Canadian Real Estate Trends report from Scotiabank shows a healthy pick up in property sales in the first quarter of the year along with a decline in the number of new listings

'The rise in demand combined with fewer new listings has restored a better balance to the market,' said Scotiabank economic analyst Adrienne Warren. 'Buyers, especially first time, are being lured by historically low mortgage rates, greater affordability and overall increased supply,' she added.

The report also shows that the long freeze on condo sales appears to be thawing. Major developers in the key markets of Toronto and Vancouver have reported a sharp increase in sales.

But the banks warned against talk of a property market recovery. 'We still feel there is more downside than upside risk to home sales and prices,' said Warren. 'The significant deterioration in domestic labour markets in recent months suggests little prospect for a major resurgence in demand in the near term. Meantime, a still-high level of active listings relative to underlying demand will continue to pressure prices,' she added.

The sentiment is widespread in the industry. Phil Soper, chief executive officer of Royal LePage Real Estate Services said Canadian housing sales will likely cool again this summer, as they typically do after the spring selling season, and will pick up again in the fall.

Scott Russell, president of the Vancouver real estate board, said the overall trend is comfortable. 'The bridge between buyer demand and housing supply is continuing to narrow which helps bring stability to home prices. The trends in our housing market in the last couple of months offer a much more comfortable, historically normal set of conditions,' he added.

However analysts are waiting for the latest Statistics Canada's labour force survey for April to be published which is expected to show a rise in unemployment which could dampen the housing market.