(AlbertaIndex, May 20, Tuesday) --- Canada’s, in particular Alberta’s, housing boom is over, but a major downward correction is not on the cards as residential real estate are not substantially overvalued and banks have been practising conservative lending, said Scotiabank.

    Writing in its latest Real Estate Trends report, Scotiabank’s Senior Economist Adrienne Warren added that Canadian housing prices continue to appreciate, even if by “the mid-single digit”.

But adjusted for inflation, the average resale home price registered its first quarterly decline in seven years in the first quarter of 2008.

Price increases for new homes are moderating and inventories of unsold new homes are trending higher, said the report.

It said: “Cooling is most notable in many of Canada's hottest urban housing markets, including Calgary and Edmonton while Regina and Saskatoon are currently in the strongest sellers’ position.”

Generally, Ms Warren found that economic conditions continue to favour the resource-rich markets in the West over manufacturing-dominated centres in Central Canada. Regina and Saskatoon are currently in the strongest sellers’ position nationally, supported by good affordability, rising population inflows and tight supply.

Home resales are running about 15 per cent below last summer’s historic peak.

The report predicted that Canada’s home sales volumes in 2008 will fall 15 per cent below last year's record levels and home prices are forecast to increase by about five per cent.

While the housing boom from 2002 - 2007 was unsustainable, Ms Warren doesn’t think a major correciton is in the cards as home prices in Canada are not substantially overvalued and the market is not overbuilt.

“Overall mortgage quality is still sound as Canadian lenders have maintained conservative loan qualifying criteria in recent years even while

introducing a range of new products including extended amortization up to

40 years,” she wrote.

Canada’s recent record of home price appreciation, averaging an annualized 10 per cent from 2002 to 2007, was unsustainable, and a return to more historical norms is a welcome development, said Scotiabank.

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