The Canadian Real Estate Association (CREA) has upwardly revised its forecast for home resales activity and average prices for 2015 and 2016. Since publishing its previous forecast in June, oil and other natural resource commodities have deteriorated, resulting in negative implications for the provinces that rely on their production.
However, with low interest rates and supportive demographics comes stronger than expected home sales activity in B.C. and Ontario, which together account for about 60 per cent of housing activity in Canada.
The national average price is greater than expected, due in part to an increase in the number of sales of higher-priced homes in B.C.’s Lower Mainland, the GTA and Calgary. This trend appears to be slowing down, and the national average price is slowing down with it. However, the MLS Home Price Index (HPI) shows that prices are still growing in regions of B.C., the GTA and Montreal.
B.C. continues to experience the strongest economic growth in the country, along with strong demographics. Home sales in B.C. have been reducing inventories and increasing prices across the province.
Alberta has seen a decline in home sales following a record-setting 2014, with levels sitting below their 10-year average. This is in part due to the uncertain outlook for oil prices and employment uncertainty discouraging potential homebuyers.
Ontario’s shortage of single-family homes for sale in and around the GTA continues, encouraging steep price increases. Sales activity in the province would likely be higher with the availability of more low-rise homes on the market.
In Saskatchewan, Manitoba, Quebec and much of Eastern Canada, supply remains high. Home prices across these provinces are expected to remain level as a large supply is reduced with sales, bringing better balance to these markets.
National sales are now projected to increase by 3.3 per cent to 495,800 units in 2015, making it the second-strongest year on record for home sales in the country. National average home price growth is now expected to reach $433,600 this year, an increase of 6.2 per cent over 2014, mostly due to price gains in B.C. and Ontario, along with the projected increase in their proportions of national sales.