The Canadian Real Estate Association (CREA) expects to see national home resales start to rebalance in the second half of the year, according to its updated forecast for 2016 and 2017. Released Wednesday, the forecast predicts resales activity will downshift in its current centres of gravity, B.C. and Ontario, and pick up in most other provinces.
Trends of record-setting average prices and transaction volumes have carried into the first half of the year from 2015. Resales activity, however, is projected to moderate as strong demand for single-family homes continues to outpace supply in tight markets such as the GTA and Lower Mainland. Despite low interest rates, the ongoing shortage of listings that is pressing up prices is forecast to curb the number of transactions in B.C. and Ontario for the remainder of 2016.
Apart from Alberta, Saskatchewan and Newfoundland and Labrador, whose housing markets are heavily influenced by the performance of natural resources, sales and prices are expected to pick up in most other provinces alongside improving economies and lingering low interest rates.
Over all, home resales activity for 2016 is projected to set a new record of 536,400 units, which would represent a 6.1-per-cent uptick. However, when population growth is factored into the equation, it pales next to 2007 as a peak year. CREA has revised its forecast for the national average price for the year upward to $490,700, which would amount to an annual gain of 10.8 per cent. In 2017, the association anticipates that home resales activity will hold steady at 537,500 units, as will the national average price, which is projected to ring in at $491,100.
Activity in B.C. and Ontario is expected to recede next year, by 2.3 per cent and 0.6 per cent, respectively, due to deteriorating affordability and persisting supply shortages. PEI is forecast to roughly maintain the record-setting sales levels predicted for the province in 2016 thanks to the low Canadian dollar, while sales in Manitoba, Quebec and Nova Scotia are forecast to sustain upward momentum into 2017. As oil prices improve and lift economic prospects in Alberta and Saskatchewan, those western provinces are projected to see a “modest rebound” in sales next year.
