International Monetary Fund says Sask house prices have stabliized

The report said housing prices in Western Canada "were significantly overvalued" during a housing boom.

"Following the recent steep declines in prices, the overvaluation has decreased significantly," the report said.

Prices in Alberta and British Columbia remain overvalued, by about eight per cent, the report said, adding prices have now stabilized in Saskatchewan, as well as in Ontario.

The large increases in housing prices in many areas of the West somewhat reflected the undervalued prices that had occurred since the early 1990s, the report said.

The report, prepared by researcher Evridiki Tsounta and released by the International Monetary Fund, indicates housing prices in most areas of Canada have now reached an equilibrium level, after some sharp ups and downs in recent years.

"Canadian house prices have increased significantly between 2003 and early 2008, with a marked downturn since mid-2008, especially in the resource-rich western provinces," the report said.

Gord Archibald, executive officer with the Association of Regina Realtors, said the analysis of the International Monetary Fund appears correct, at least to the extent that prices in Regina have been fairly stable for several months.

Prices in the Regina market climbed dramatically in 2007 and spiked midway through 2008, Archibald said Wednesday.

Prices have remained fairly stable, with some fluctuations up and down, since the peak was reached last year, Archibald said.

But the supply of houses for sale in the Regina market is tight right now, Archibald said. That tight supply provides the potential for prices to increase, especially if demand increases next year, he said.

Archibald said he was not aware of the International Monetary Fund doing studies in the past into housing prices.

But it is perhaps something the organization wanted to do because a sharp drop in housing prices in the U.S., combined with widespread mortgage defaults, is widely blamed for causing the international recession that began last year, Archibald said.

Paul Caton, a senior market analyst with Canada Mortgage and Housing Corp., said the real estate market in Regina is balanced right now, with neither buyers nor sellers having an advantage. That balance tends to keep prices fairly stable, Caton said.

That balanced situation is also increasingly evident in Saskatoon and in most other cities in Western Canada, Caton said.

Neil Scott - Regina Leader-Post