The Canadian Real Estate Association has revised its forecast for home sales activity through the MLS Systems for both 2015 and 2016. Following its last forecast which was released in September, British Columbia and Ontario have experienced stronger housing markets, leading CREA to raise sales and average price forecasts in these provinces.
Although housing markets in other provinces have met expectations through the autumn, 2016 is predicted to bring a rebound in oil prices, causing housing market expectations to fall in Alberta. Forecast average prices are also expected to fall in Alberta, as well as in Saskatchewan and Newfoundland and Labrador.
Interest rates are expected to increase later than previously predicted, with the CREA’s revised forecast now saying they will remain on hold until late 2016, thereby continuing to support sales and prices next year.
Recently announced changes to mortgage regulations that will be implemented early next year are expected to cool housing markets in Greater Vancouver and the GTA, but the CREA expects the changes to affect housing markets beyond their intended targets. In particular, the CREA predicts Calgary will see reduced sales activity once the regulatory changes take effect in early 2016.
The forecast for national sales in 2015 was revised to reflect stronger than expected activity in both B.C. and Ontario. National sales have been projected to increase by five per cent to 504,000 units in 2015, which would make this year the second-strongest on record for home sales in Canada.
The annual forecast for national average home price growth has increased to $442,600 for 2015, representing an increase of 8.4 per cent. This increase reflects average price gains in both British Columbia and Ontario, along with a projected increase in those provinces’ proportion of national sales.
National sales are expected to reach 498,600 in 2016, a 1.1 per cent drop from 2015, as sales activity in British Columbia and Ontario is expected to moderate and housing market conditions slow in Alberta.
The national average price is predicted to increase by 1.4 per cent to $448,700 in 2016. Price gains next year are expected to be strongest in Ontario due to an ongoing shortage of listings for single-family homes, along with high demand for them, in and around the GTA.