Prices for detached bungalows and standard two-storey homes in Calgary have risen from a year ago, according to the Royal LePage House Price Survey released Wednesday.

But average prices for standard condominiums have decreased slightly.

In the third quarter, detached bungalows posted the largest year-over-year price increases, rising 6.5 per cent to $434,267. Prices for standard two-storey homes rose 4.1 per cent to $431,544, while standard condominiums declined slightly by 2.1 per cent to $249,167.

“Calgary’s real estate market was very active during the third quarter,” said Ted Zaharko, broker and owner of Royal LePage Foothills. “Despite recent changes to mortgage lending rules, we saw a variety of buyers, including first-time home buyers, enter the market.”

Zaharko said inventory levels are down slightly when compared to figures from last year. Although this shortage has resulted in some multiple offer situations, desirable listings are still lingering on the market, he added.

“I’ve seen several well-priced properties sit on the market because buyers want to explore their options,” said Zaharko. “The shortage in inventory levels has not changed this — buyers like to shop around before making an offer.”

Nationally, the average standard two-storey home in Canada increased four per cent year-over-year to $403,747, while detached bungalows rose 4.8 per cent to $366,773. Standard condominiums saw an increase of 1.8 per cent to $243,607.

Royal LePage said most cities in Canada experienced modest price appreciation in the quarter, but fewer homes were sold compared with the same period in 2011.

“A drop in the number of homes trading hands typically precedes a period of softening house prices. Where there is reduced demand, those who want to sell their homes adjust their asking price to stimulate interest. Home sales were positive in July, fell nine per cent year-over-year in August and we are expecting September to show a decline as well,” said Phil Soper, president and chief executive of Royal LePage. “We had predicted this cyclical change early in the year, a natural market reaction after a period of strong expansion. Changes to mortgage regulations, which took effect on July 9th, accelerated the correction.”

In July, the federal government announced that the maximum amortization period for insured mortgages would be reduced to 25 years from 30 years. Royal LePage said this was the fourth intervention in just four years and the most impactful. Potential first-time buyers, which in a typical market represent one third to one half of all purchase transactions, felt the changes immediately, it said.

“While hard-hit in the short-term, we expect first-time buyers to adjust to the tougher mortgage qualifications. The dream of homeownership is very much alive among young Canadians. They may remain renters for some time as they save; some will opt for less expensive neighbourhoods and some will purchase smaller homes,” said Soper. “In the meanwhile, we will feel their absence in national sales statistics.”

Queen’s University real estate expert John Andrew said he is surprised that while the number of homes sold in some most Canadian real estate markets is declining, home prices haven’t dropped as well.

“Home prices are defying logic and holding remarkably steady, or in some cases, still rising significantly, such as in Toronto and Calgary,” he said. “This will be temporary, with a normal lag of three to six months between significant sales volume changes and home price changes. The changes to mortgage rules brought in by the federal government in July seem to be having their intended effect. What’s happening in real estate markets across Canada, and what lies in store for the next few months? I predict some dramatic changes ahead.”

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