National home sales volumes in Canada are expected to rise 5% in 2015 to reach 504,000, the second highest level ever and 1.7% up on the previous estimate, says The Canadian Real Estate Association (CREA).
The average home price forecast has also risen to 8.4% to CAN$442,600, reflecting average price gains in British Columbia and Ontario, according to the latest CREA data from sales via the Multiple Listing Service (MLS) systems.
Since CREA’s last forecast was published in September 2015, sales were expected to rise, 3.3% to 495,800 units
In 2016, national sales are forecast to reach 498,600, down 1.1% from 2015 as activity in British Columbia and Ontario moderates and housing market conditions soften in Alberta.
But the national average price is forecast to rise to $448,700 in 2016. Price gains are forecast to be strongest in Ontario (2.9%) due to an on-going shortage of listings for single family homes coupled with strong demand.
Since CREA’s last forecast, housing markets in British Columbia and Ontario have strengthened further, so sales and average price forecasts have risen.
While housing markets in other provinces have performed as expected through the autumn, prospects in 2016 for a rebound in oil prices – and by extension, housing markets in oil producing provinces – have dimmed. Accordingly, forecast for sales activity in Alberta has been revised lower, as have forecast average prices in Alberta, Saskatchewan and Newfoundland and Labrador.
Interest rates are now expected to remain on hold until late next year and so will continue to support sales and prices next year, says CREA.
Recently announced changes to mortgage regulations that take effect early next year risk cooling housing markets beyond Greater Vancouver and the Greater Toronto Area (GTA), their intended targets. In particular, the regulatory changes are also likely to reduce sales activity in Calgary once they take effect in early 2016.
British Columbia is projected to post the largest annual increase in sales activity in 2015 (up 21.4%), followed by Prince Edward Island, at 18.8% and Ontario at 9.3%. The rise in Ontario would be higher were it not for a shortage of low rise homes listed in and around the GTA.
The largest falls come in Alberta (down 21.4%), Saskatchewan (down 10.8%), and Nova Scotia (down 5.1%).
Sales in New Brunswick are forecast to rise 5.4% and Quebec at 4.8% compared to sluggish 2014 results. Newfoundland and Labrador sales are set to rise 3.2% in 2015 on the back of a rebound in the second half of the year, while activity in Manitoba is forecast to rise 2.3%.
British Columbia will be the only province this year where average home prices rise faster (at 11.5%) than the national average, with Ontario’s 8% rise is forecast to be roughly in line with the national increase.
Elsewhere, average prices in 2015 are forecast to rise by about 2% in Manitoba, Quebec and Nova Scotia, while falling 2.7% in Newfoundland and Labrador, 1.9% in Alberta and by less than 1% in Saskatchewan, New Brunswick, and Prince Edward Island.
In 2016, sales declines will offset activity gains in Quebec and Atlantic provinces, where strengthening economic prospects should translate into a slow and steady improvement in sales amid the continuation of affordable prices due to an elevated supply of listings. The exception is in Newfoundland and Labrador, where economic and demographic challenges are expected to persist in 2016.
British Columbia and Manitoba are forecast to see average price gains of about 2% in 2016, followed by Nova Scotia and Prince Edward Island at around 1.5%, and by Quebec and New Brunswick with increases of less than 1%.
By contrast, prices in Alberta are set to fall 2.5%, Saskatchewan by 1.2% and Newfoundland and Labrador are forecast to see average home prices fall 1%.
The Canadian Real Estate Association (CREA) is one of Canada’s largest single-industry trade associations, representing more than 111,000 Realtors working through 90 real estate boards and associations.
The main picture, taken by Scott Wilkinson, is from FreeImages.com.
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