The Canadian Real Estate Association has updated its forecast for home sales activity via the Multiple Listing Service® (MLS®) Systems of Canadian real estate Boards and Associations for 2015 and extended it to 2016.
The further decline in oil prices and the Canadian dollar has weakened further against the U.S. dollar, mortgage rates have declined and the U.S. economy has strengthened since CREA’s last forecast, which taken together are expected to benefit economic and job growth in other provinces. Accordingly, CREA has upwardly revised its forecast for sales activity for much of the rest of the country.
The balance between supply and demand continues to tighten in British Columbia and Ontario. These are the only two provinces where tight supply relative to demand is expected to result in average price gains that surpass inflation this year.
British Columbia is projected to post the largest annual increase in activity in 2015 (+4.9 per cent). These numbers represent upward revisions to CREA’s previous forecast.
Alberta is expected to post the largest annual decline in sales this year (-19.2 per cent), though the trend for activity is expected to begin recovering from a weak start to the year as consumer confidence recovers. Sales are also forecast to decline on an annual basis in Saskatchewan (-11.2 per cent), and Manitoba (-1.3 per cent).
The national average home price is now forecast to rise by two per cent to $416,200 in 2015. Only British Columbia (+3.4 per cent) and Ontario (+2.5 per cent) are forecast to see gains in excess of the national increase.
Prices are projected to remain largely stable elsewhere, with increases or decreases of around one per cent or less this year. The exception is Alberta, where average price is forecast to fall by 3.4 per cent, reflecting a pullback in sales for luxury properties compared to homes in more affordable price segments.
In 2016, national sales activity is forecast to reach 482,700 units, representing an annual increase of 1.7 per cent. Much of the annual increase reflects an anticipated recovery for sales activity in Alberta and Saskatchewan in line with expected economic improvement in those provinces.
Strengthening economic prospects are expected to result in improving sales activity in other provinces where sales have struggled, keeping prices more affordable amid ample supply. Meanwhile, anticipated mortgage rate increases are expected to keep activity in check in markets where homes are already less affordable and prices have continued rising.
The national average price is forecast to rise by a further 1.9 per cent to $424,100 in 2016. Given an ongoing shortage of supply for single family homes in and around the Greater Toronto Area, price growth in 2016 is forecast to be strongest in Ontario (+2.5 per cent) and Alberta (+2.4 per cent).
Gains of around two per cent are forecast for British Columbia.