The organization that represents Canada’s 100,000 realtors expects house prices to continue to grow, but even the Ottawa-based group says consumers better get ready to accept increases that barely match inflation.
In its June forecast, the Canadian Real Estate Association now says the average sale price will reach $436,700 in 2016, a 1.7 per cent increase from 2015. For this year, CREA expects the average sales price to rise 5.2 per cent nationally.
Only half of Canadian provinces can now expect prices to increase in 2015, says the group. In Alberta, the average sales price is expected to drop 2.8 per cent in 2015 before increasing by 2.4 per cent the following year — leaving prices in the oil-producing province below where they were at the end of 2014.
“While oil prices have firmed up recently, they remain well down from where they were a year ago and their outlook remains uncertain,” said CREA, in its forecast. “The extent to which lower oil prices will continue to weigh on the Canadian economy also remains uncertain. In the Prairies region, this is is dampening consumer confidence and sidelining potential homebuyers.”
In terms of sales, the forecast is for a 1.3 per cent increase in activity in 2015 from 2014 with a 0.8 per cent bump in 2016. A decline in sales is now forecast in three province for 2015 with Alberta now expected to have an 18.2 per cent drop in activity.
CREA also released its monthly sales numbers Monday and chalked up a robust May to changes in mortgage default insurance coming in June which will make it more expensive to buy if you have less than a 10 per cent down payment.
“Some buyers may have jumped off the fence and purchased in May to beat the increase,” said Pauline Aunger, president of CREA, in a release.
Sales for May jumped 3.1 per cent from April on a seasonally adjusted basis and were up 2.7 per cent from May, 2014. Prices across the country rose 8.1 per cent from a year ago to $450,886.
Prices in Canada’s largest housing market continue to drive the overall market. The average sale price in Greater Toronto shot up 11 per cent from a year ago with sales increasing 10.1 per cent during the same period.
“Sales in and around the Greater Toronto area playing a starring role in the monthly increases,” said Gregory Klump, chief economist with CREA, in a release. firstname.lastname@example.org