Canadian home sales expected to see gradual rise this year and into 2016
Home sales in Canada are set to see a continued gradual improvement and housing market but oil prices are likely to continue to weigh on the economy and thus real estate confidence.
The latest forecast for home sales activity from the Canadian Real Estate Association (CREA) says that in the Prairie region in particular lower oil prices are dampening consumer confidence and side lining potential home buyers.
Home sales elsewhere in Canada are continuing to evolve mostly as expected, with the exception of a slower than expected spring market in Nova Scotia due to extraordinarily inclement weather and stronger than expected sales activity across much of British Columbia.
It says that low rise property markets remain tight in parts of British Columbia and Ontario. These are the only two provinces where a shortage of listings for low rise homes is expected to fuel average price gains above inflation this year.
In other provinces, listings have begun to decline but remain elevated. Average prices across the Prairies, Quebec and the Atlantic region are unlikely to see much in the way of price growth over the forecast horizon as sales gradually deplete listings.
The forecast for national sales in 2015 has been revised upward, reflecting stronger than anticipated activity in British Columbia. National sales are now projected to rise by 1.3% to 487,200 units in 2015, which is slightly above its 10 year annual average.
British Columbia is projected to post the largest annual increase in activity in 2015 at 12.2% while Alberta and Saskatchewan are expected to post the largest annual sales declines with a fall of 18.2% and 12.9% respectively. Modest changes in annual home sales are forecast for all other provinces.
The forecast for national average home price growth has been revised upward to $429,400 for an annual increase of 5.2% in 2015. This reflects forecast average price gains in British Columbia and Ontario together with a projected increase in their proportion of national sales.
British Columbia is expected to be the only province where average price rises faster at 8.5% than the national average, while the rise in Ontario’s average price of 5.6% is predicted to be roughly in line with the national increase.
Average prices are projected to remain largely stable in other provinces this year, with annual changes ranging between plus or minus 1%. The exception is Alberta, where average price is forecast to slip by 2.8% amid a pullback in higher priced property sales activity.
In 2016, national sales activity is forecast to reach 491,200 units, a further annual gain of 0.8%. The increase reflects an anticipated rise in sales activity in Alberta and Saskatchewan, in line with a gradual improvement in their economic outlook.
Although sales in British Columbia are expected to remain strong in 2016, it is the only province where they are forecast to moderate by 2.9% due to stretched affordability.
‘Strengthening economic prospects should translate into slow and steady gains in other provinces where home sales have struggled in recent years while prices remained more affordable due to an elevated supply of listings,’ the CREA report says.
The national average price is forecast to rise by a further 1.7% to $436,700 in 2016, with larger percentage increases in British Columbia, Alberta, Manitoba, and Ontario. Price growth in 2016 is forecast to be strongest in Ontario with growth of 2.6% due to an ongoing supply shortage of listings for low rise homes in and around the Greater Toronto Area.
An improvement in the share of higher priced sales activity is anticipated to boost average prices in Alberta by 2.4% while gains of around 2% are forecast for British Columbia and Manitoba, and around 1% for Saskatchewan and Quebec. Average home prices in the Atlantic region are forecast to hold steady in 2016.