CREA expects average home prices in Alberta, Labrador, Newfoundland, Saskatchewan, to decline further in 2016 because of the downturn in the price of crude oil. The association is estimating average Alberta’s home prices will fall by 2.5% in 2016. Saskatchewan home prices are expected to fall by 1.2% and by 1% in Labrador and Newfoundland.
Canada’s national average home price, however, is expected to edge higher by 1.4% in the year ahead, to about $449k; with Ontario leading the other regions with a 2.9% increase.
CREA says that low interest rates are boosting sales, however recently announced federal reforms pertaining to mortgage lending rules will have a negative effect beyond the scope of intended targets in the Toronto & Vancouver area; which are now widely recognized as Canada’s most expensive markets. Minimum down payments will be going up for homes that are selling for more than half a million; so the more expensive housing markets will be affected most. The regulatory changes will also cause unintended collateral damage to housing markets beyond Vancouver & Toronto; including places that are still under the strain of low oil prices. Sales activity in Calgary’s housing market, which has been hit so hard with the record slip in oil prices, will be affected by the higher minimum down payments for homes above $500k.
CREA’s recently revised 2016 forecast says that property sales were up 1.8% between October & November. Half the other markets covered posted declines. The Greater Toronto Area and Lower Mainland area of BC had the biggest month-month gains. The national sale price was up 10.3% to just about $457k on average. Excluding the areas of Vancouver & Toronto, the national average price would have been $339k in November, up 3.4% from last year’s figures. CREA’s MLS home price index was up 7.1%, the largest gain in more than five years.
CREA is expecting Canada will have the 2nd highest sales activity on record this year; an increase of 5% to 504k units expected in 2016. Partially offsetting increases in most provinces, estimates are that Alberta will see a 21.4% decline this year. Saskatchewan is also facing a 10.8% decline in sales activity compared with 2014. Nova Scotia will see a 5.1% decline, according to CREA’s estimates. British Columbia is expected to have the biggest increase. Ontario home sales are projected to be 9.3% higher in 2016 compared to last year; even though hampered by a shortage of single family homes around the GTA.
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