The Canadian Real Estate Association (CREA) has released its 2014-15 home prices and sales forecast, and it’s confusing.
Not much is expected to change in terms of sales volumes, according to CREA but prices are set to jump by a respectable 5.7% through the rest of this year, before levelling off to a negligible 0.7% in 2015.
The CREA report says that an unusually fierce Canadian winter resulted in a slow start to 2014 national sales activity, as energy and money that might otherwise have gone into moving house went instead to repairing damage, to the Canadian house and the Canadian psyche too!
As the first quarter of 2014 ended, CREA said sales momentum was constrained by a shortage of listings in a number of local markets. However, there was a rise in newly listed properties in April and May, supporting an increase in sales activity.
There’s usually a sharp jump in house buying at the beginning of Spring, but thanks to the effects of winter and a stock shortage, this didn’t come into effect until later in the season. Overall, the sales volume from March to May was roughly in line with averages, and the deferrals from earlier in the year are likely to have been depleted by now too. That means the strength of sales momentum in the months at the beginning of summer may not offer a true picture of what the year’s going to be like either.
CREA’s forecast for sales activity in 2014 is largely unchanged from its previous forecast, issued in March. However, interest rates were then expected to rise in the second half of the year, and it’s now thought that this change won’t occur until the end of the year. That means the balance of 2014 will still be a cheap-credit period when it’s a good time to buy a house.
Sales are forecast to reach as high as 463,400 units in 2014, a 1.2% increase on 2013. Compare that with CREA’s forecast figure of 463,700 for the year, or a 1.3% increase, and it seems their forecasts are pretty reliable.
CREA also expects sales to remain in line with 10-year averages. British Columbia is forecast to post the largest year-on-year increase in activity at 8.3%, while Alberta is expected to see a 3.8% rise in sales in 2014. Nova Scotia is forecast to see a 5.1% fall, Quebec a 1.7% fall and New Brunswick and Newfoundland to see falls of 4.2% and 2.6% respectively. Labrador is forecast to see a 2.6% fall.
The changes to Canada’s housing market take place against a background of improving jobs markets and a growing economy, with a slow and gradual increase in the interest rates of fixed and variable mortgages.
In theory this should benefit markets where sales are a little softer and prices a little more affordable. In Canada as a whole, the average house price is projected to rise by 5.7% to $404,300 in 2014, on the back of general growth, a delayed spring buying season, interest rates remaining low throughout the bulk of the year, and demand-led markets in certain areas, especially Calgary and Toronto. In 2015, the average price of a home in Canada is expected to rise to $407,300.