Canadian real estate markets remain remarkably buoyant, especially in light of the deepening housing downturn in the United States and the generally softening conditions in most other advanced economies globally, according to experts who presented today at Bank of Nova Scotia’s Canadian Real Estate Outlook and Trends Forum 2008.

During the forum, which was held in Toronto, keynote speaker Phil Soper, president and CEO of Brookfield Real Estate Services commented, “Our expectations are that balanced conditions will prevail throughout 2008, which will mark a return to a more ‘normal’ environment than the highly skewed seller’s market that we have experienced over the better part of this decade. A stumbling American economy will impact us, slowing growth here at home, yet the solid foundation that supports the contemporary Canadian economy should prevent the housing market here from retracting.”

Also speaking at the conference was Adrienne Warren, senior economist, Scotiabank. “We expect construction, sales and price gains to moderate in 2008 due to decreasing affordability, especially for first-time buyers, and some softening in domestic economic conditions associated with the intensifying U.S. slowdown,” remarked Warren. “Housing starts will likely ease to around 204,000 units, still firmly above underlying household formation, with the more affordable multiple-family segment holding up better than single-detached construction.”

Warren stated that housing starts totaled 228,343 units in 2007, essentially matching the high level of activity of the prior two years and only 2% below the 233,431 unit cyclical peak of 2004. Strength was evident across the country, but led by more than a 60% surge in new homebuilding in Saskatchewan, underpinned by strong job growth, good affordability and a positive shift in net interprovincial migration.

While Western Canada continues to lead in price appreciation, average home prices rose by at least 5% in all provinces last year. The momentum of construction and sales has carried through to 2008.

Warren also reported that from a demand standpoint, economic conditions still favour Western Canada, with its booming resource-based industries and extremely tight labour markets. Yet, affordability is becoming a constraining factor in several centres, including Calgary where average home prices have doubled in the past four years.

Based on a combination of job growth, housing supply and affordability, among this year’s potential outperformers are Saskatoon, Regina and Winnipeg in the West, Sudbury, Hamilton and Quebec City in Central Canada, and St. John’s to the East.

Commercial market activity in Canada should be brisk in 2008 even as the pace of residential building gradually cools. Notwithstanding a number of major new office tower developments currently underway, centred in Toronto and Calgary, significant new space is not expected until 2009.