Resales to fall in 2019: CREA
OTTAWA – Unit sales via its Multiple Listing Service (MLS) could fall to a nine-year low in 2019, the latest forecast from the Canadian Real Estate Association (CREA) says, the result of government policy tightening mortgage qualifications, increasing household debt levels and upticks in interest rates.
This is despite economic and demographic fundamentals that remain supportive of housing demand in many parts of the country. The realtors’ group also notes growth in home prices has slowed sharply in some regions.
“Indeed, home prices are declining in parts of the country where the supply of homes available for purchase is elevated relative to sales,” CREA’s forecast says.
Despite supportive population and job growth, it believes national home sales will post a double-digit decline in 2018, falling to the lowest level in five years. “In 2019, home sales activity and prices are expected to be held in check by recent policy changes from different levels of government, in addition to additional interest rate increases,” it maintains.
CREA has revised its September forecast lower saying the anticipated sales rebound in British Columbia failed to materialise; the recovery in Ontario has run its course; and, sales in Alberta declined – all of which were partially offset by a stronger than anticipated sales in Quebec.
“National sales are now projected to decline by 11.2% to 458,200 units in 2018,” the forecast says, adding B.C. and Ontario will account for the lion’s share of the decline. Alberta, Saskatchewan, Manitoba and Newfoundland & Labrador will also fall to multi-year lows. By contrast, activity will remain strong in Quebec and in the Maritimes, particularly New Brunswick.
The national average price is projected to ease to $488,600 this year – down 4.2% from 2017. “The decline in the national average home price in 2018 has been mostly compositional, reflecting fewer sales in British Columbia and Ontario, Canada's two most expensive provinces by a substantial margin,” CREA remarked.
However, half of all provinces, including B.C., are expected to post average price gains for 2018. The highest decline – 2.6% – forecast for Ontario and largely reflects fewer higher-price home sales in Toronto, a market segment that didn’t see its usual seasonal jump in the average price this year.
Meanwhile, home prices in Eastern Ontario, Quebec, New Brunswick, Nova Scotia and Prince Edward Island are expected to continue rising. They are projected slide 2.5% in Alberta and Saskatchewan and by about 2% in Newfoundland & Labrador. In these provinces the supply of homes available for sale is elevated relative to sales activity.
At 456,200 units, national sales are forecast to remain little changed in 2019, as rising interest rates combined with the mortgage stress-test offsets continuing growth in population, jobs and income. If realised, this would market a nine-year low, as declines in B.C. and Alberta are expected to be offset by small gains in Ontario and Quebec.
The national average price is forecast to rebound by 1.7% to $496,800 in 2019, reflecting growth in Ontario, Quebec, New Brunswick and Nova Scotia. Modest gains are forecast for B.C., Manitoba and P.E.I. By contrast, prices are forecast to continue falling in Alberta, Saskatchewan and Newfoundland & Labrador.