CREA forecasts slowdown
OTTAWA – Home sales via its Multiple Listing Service (MLS) are expected to ease by 1.6% in 2019, according to the latest forecast Canadian Real Estate Association (CREA), although it maintains demographic fundamentals remain supportive of housing demand.
The realtors’ group acknowledges the outlook for economic growth has dimmed since it published its last forecast in December 2018 but points out both interest rates and conditions in the labour market continue to support the market. “However, policy headwinds continue to limit access to mortgage financing and dampen housing market sentiment,” CREA maintains.
CREA forecasts national home sales will ease to 450,400 units in 2019, its lowest mark since 2010 and the lowest on a per capita basis in nearly two decades. With further interest rate hikes this year having become less likely, the monthly trend for sales is generally expected to improve slowly from a starting point that has been lowered by tightened mortgage lending and provincial housing policies in recent years.
British Columbia is again expected to account for much of the projected decrease in national sales this year, along with a further expected decline in Alberta, but that should be offset by continuing strength in Quebec activity and a small gain in Ontario.
The national average price is projected to stabilise at around $487,000 in 2019, following a 4.1% drop recorded in 2018, which was the largest in almost 25 years.
The average home price is forecast to retreat in British Columbia, Alberta, Saskatchewan and Newfoundland & Labrador. In the latter three provinces, the supply of homes available for sale is historically elevated relative to sales activity.
Meanwhile, home prices in Eastern Ontario, Quebec, New Brunswick, Nova Scotia and Prince Edward Island are expected to continue rising in line with their firmer market balances. Prices are also expected to rise in Ontario’s Greater Golden Horseshoe where homes remain in short supply.
National sales are forecast to move slightly higher in 2020 to 459,400 units – an uptick of about 2% – which CREA attributes to continuing population, job and income growth offsetting the resumption of interest rate increases and the mortgage stress-test.
“Sales are forecast to rise in all provinces but Newfoundland & Labrador, with a partial recovery in activity in British Columbia and Alberta combined with further gains in Quebec contributing most to the gain in national activity,” CREA believes. “Despite a small expected rebound in British Columbia and Alberta, sales in these provinces would nonetheless remain 10 to 20% below their 10-year averages, as would sales in Saskatchewan and Newfoundland & Labrador.”
The national average price is forecast to edge up 0.8% to $490,800 in 2020, reflecting further average price gains in Ontario, improving sales activity in British Columbia and Alberta (despite further price declines), and the combination of both higher sales and average prices in Quebec.
Average price trends across Canada in 2020 are generally expected to be more moderate versions of those in 2019, with small declines in British Columbia, Alberta, Saskatchewan and Newfoundland & Labrador, and modest gains in all provinces from Manitoba through to the Maritimes.