Resale housing forecast extended to 2011
With Canadian economic growth rebounding from the recession, the unusually severe decline in sales activity in early 2009 is not expected to recur in 2010. Annual activity in 2010 is forecast to be well above the previous year's level as a result.
CREA forecasts national activity will reach 527,300 units in 2010, up 13.3 per cent from 2009. This would represent a new annual record, standing 1.2 per cent above the previous peak in 2007. Low interest rates are expected to boost housing demand in the first half of the year, resulting in strong annual sales growth in nearly all provinces in 2010, led by British Columbia and Ontario.
National home sales activity is expected to remain strong in the first half of 2010, fuelled by low interest rates and homebuyers motivated to avoid the HST before it comes into effect in Ontario and British Columbia. Over the second half of the year, national activity is expected to trend downward as the last of pent-up demand is exhausted, interest rates begin rising, and the HST comes into effect in Ontario and British Columbia.
Interest rate increases will contribute to weaker national sales activity in 2011. National home sales activity is forecast to decline 7.1 per cent to 490,100 units in 2011, putting it on par with annual levels reported in 2005 and 2006.
"Although interest rates are expected to rise, they will still be low enough to keep affordability within reach for many homebuyers requiring mortgage financing, and support overall housing demand," said CREA
The national average home price is forecast to climb 5.4 per cent in 2010, reaching a record
The national average price is forecast to ease by 1.5 per cent in 2011. Modest average price gains are forecast for all provinces except British Columbia and Ontario, whose share of national activity is expected to ease. The shift in the contribution made by provinces toward national activity will continue skewing the annual comparison in the national average price in 2011.
The price trend is similar but less dramatic for the weighted national average price, which compensates for changes in provincial sales activity by taking into account provincial proportions of privately owned housing stock. The weighted national average price is forecast to climb 4.8 per cent in 2010, and remain stable in 2011.
"Improved financial market stability and recovering global economic growth mean that home sales activity in 2010 is unlikely to repeat the dive it experienced in late 2008 and early 2009," said Chief Economist
"Fiscal restraint, a strong Canadian dollar and a subdued inflation outlook point to marginal interest rate increases over the next couple of years, especially if the U.S. economic recovery proves to be weak and protracted," said Klump.
"The Bank of
"The decline and subsequent rebound in sales activity for homes in the upper price spectrum in some of Canada's priciest markets skewed average prices upward in the second half of 2009 and into 2010. This segment of housing activity in Ontario and British Columbia is expected to ease beginning in the second half of 2010, causing average prices to moderate in those provinces," said Klump.
"A downward trend in national sales activity combined with an increase in listings will result in a more balanced market. Although builders are understandably more upbeat than they were during the depth of the recession, speculative building will likely continue to be held in check. As a result, while the real estate market will become more balanced,
CREA Residential Market Forecast:
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2009 2010 2011
Residential Annual 2010 Annual 2011 Annual
unit sales 2009 percentage Forecast percentage Forecast percentage
forecast change change change
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Canada 465,251 7.7 527,300 13.3 490,100 -7.1
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British
Columbia 85,028 23.4 101,900 19.8 88,800 -12.9
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Alberta 57,786 2.5 63,050 9.1 64,000 1.5
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Saskatchewan 10,856 6.5 10,900 0.4 11,050 1.4
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Manitoba 13,086 -3.2 14,050 7.4 14,350 2.1
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Ontario 195,840 8.2 223,700 14.2 200,300 -10.5
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Quebec 79,290 3.3 87,950 10.9 85,450 -2.8
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New Brunswick 7,003 -7.3 7,550 7.8 7,700 2.0
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Nova Scotia 10,021 -7.8 11,400 13.8 11,500 0.9
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Prince Edward
Island 1,404 -0.6 1,450 3.3 1,450 0.0
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Newfoundland 4,416 -5.9 4,900 11.0 5,050 3.1
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2009 2010 2011
Residential Annual 2010 Annual 2011 Annual
average price 2009 percentage Forecast percentage Forecast percentage
forecast change change change
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Canada 320,333 5.0 337,500 5.4 332,400 -1.5
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British
Columbia 465,725 2.4 485,500 4.2 476,600 -1.8
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Alberta 341,201 -3.3 357,300 4.7 361,700 1.2
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Saskatchewan 233,695 4.1 242,500 3.8 248,500 2.5
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Manitoba 201,343 5.8 210,300 4.4 215,300 2.4
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Ontario 318,366 5.3 332,700 4.5 326,000 -2.0
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Quebec 225,412 4.7 240,500 6.7 249,100 3.6
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New Brunswick 154,906 6.3 159,400 2.9 164,200 3.0
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Nova Scotia 196,690 3.6 200,900 2.1 204,700 1.9
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Prince Edward
Island 146,044 4.4 149,900 2.6 153,200 2.2
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Newfoundland 206,374 15.6 222,300 7.7 238,900 7.5
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NOTE: All statistics contained in this release are obtained through analysis of the MLS(R) Systems of real estate Boards across
MLS(R) Systems are co-operative marketing systems used only by Canada's real estate Boards to ensure maximum exposure of properties listed for sale.
About The Canadian Real Estate Association
The Canadian Real Estate Association (CREA) is one of Canada's largest single-industry trade associations, representing more than 98,000 real estate Brokers/agents and salespeople working through more than 100 real estate Boards and Associations.
Registrants in any province who become members of organized real estate have an obligation to act in accordance with the REALTOR(R) Code. This Code outlines the accepted standard of conduct for all real estate practitioners who are members of a real estate Board or a Provincial Association.
CREA owns the MLS(R) and REALTOR(R) trademarks, which signify a high standard of service and identify members of CREA.
For further information: Spencer Callaghan, Communications Officer, The Canadian Real Estate Association, P: (613) 237-7111 or (613) 884-1460, E: [email protected]
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