According to the Canadian Real Estate Association (CREA) the outlook for the Canadian real estate market in 2016 and on into 2017 is positive on all counts. Recent forecasts anticipated that housing activity would rebalance in 2016 with many of the defining themes among Canadian housing markets last year persisting, and in some cases intensifying, in early 2016. Interest rate are now also widely expected to remain low for longer, with administered lending rates beginning to rise no earlier than the second half of 2017.
Canadian resale housing market trends this year are expected to resemble those apparent in 2015, with very tight supply leading to strong price gains in British Columbia and Ontario. In line with the prevailing forecast for stronger Canadian economic growth beginning in the second half of 2016, Canadian home sales activity is now expected to rebalance in 2017.
British Columbia is again forecast to post the largest annual increase in activity (+11.8 per cent), with Alberta expected the record the largest annual sales decline (-18.7 per cent). A lack of supply is expected to hold activity in check in Ontario in 2016 (+0.3 per cent) despite the continuation of very strong demand.
Elsewhere, modest sales gains in Manitoba (+3.4 per cent), Quebec (+3.4 per cent), New Brunswick (+1.2 per cent), Nova Scotia (+1.1 per cent) and Prince Edward Island (+3.3 per cent) are forecast for 2016, reflecting expected improvements in these province’s economic prospects.
Consumer confidence is anticipated to strengthen and begin drawing homebuyers off the sidelines in Alberta, Saskatchewan and Newfoundland and Labrador as their economic prospects improve. This is anticipated to contribute to a modest rebound in sales activity in these provinces in 2017.
British Columbia is the only province forecast to post an annual decline in home sales in 2017, reflecting a combination of a growing shortage of single family homes available for sale and deteriorating affordability. Even so, activity is expected to continue trending near record levels. Ontario is forecast to see sales level off in 2017.
Sales activity is forecast to continue to push higher in Manitoba, Quebec, and Nova Scotia in 2017, reflecting the prevailing forecast for improving economic prospects in these provinces. Sales in Prince Edward Island are also forecast to improve as the province continues to benefit from a lower Canadian dollar.
Slower national average price growth in 2017 reflects weaker price gains in British Columbia and Ontario. Price trends in these provinces reflect an anticipated slowdown in luxury sales activity, a continuing supply shortage of relatively more affordable low rise family homes and an anticipated increase in relatively more affordable condo unit sales as a proportion of total sales activity. In other provinces, an ample supply of listings relative to demand will continue to keep price gains in check.
