The Canadian housing market is expected to stay strong in 2014, while sales of previously owned homes now look to come in slightly better than expected this year, according to the country’s largest real estate association.
The Canadian Real Estate Association’s 2013 sales projections, released Monday, have risen slightly across Ontario and the four western provinces. And the group says prices have been generally firmer than originally forecast.
“Most housing markets are well balanced, including many large urban centres,” said Gregory Klump, CREA’s chief economist.
“Housing price gains are always stronger in places where supply is tight relative to demand, such as we’re seeing in Calgary and in parts of southern Ontario including the low-rise market in Toronto.
“Prospects for price appreciation will be limited in parts of Quebec and some areas in the Maritimes, where competition among sellers has increased.”
Nationally, CREA is projecting 458,200 homes will be sold through its members this year — eight-tenths of a per cent more than in 2012 and up from the September forecast of 449,900.
CREA also anticipates sales next year will be even stronger, coming in at 475,000 homes nationally, up from the previous 2014 forecast of 465,600.
It attributes the gain to a weak start to 2013, which it does not expect to be repeated in early 2014.
The group projects the national average home price for 2013 will reach $382,200, a 5.2 per cent increase from last year. In the new year, it projected the national average price for 2014 will be $391,100, up 2.5 per cent from 2013.
Alberta is forecast to post the biggest increase in average price in 2014, with a gain of 3.4 per cent. Price increases in Saskatchewan, Manitoba and Newfoundland and Labrador are expected to run just ahead of overall inflation, with the average price increase in Ontario running just below it.
CREA says November’s home sales dipped slightly from October but were up substantially from the same month last year, when the industry was going through a soft patch attributed to Ottawa’s decision to tighten rules for mortgage lenders and borrowers.
Home sales edged 0.1 per cent lower from October on a seasonally adjusted basis. Actual activity was 5.9 per cent above November 2012 levels.
The national average sale price was up 9.8 per cent on a year-over-year basis in November while the MLS Home Price Index, which CREA says is a better indicator, rose 4.1 per cent year over year in November.
Bank of Montreal chief economist Douglas Porter pointed out that only one of the country’s largest 26 cities has seen a drop in average home prices so far this year. Average prices in Victoria fell by 0.6 per cent, while all the other cities saw single-digit gains.
“Looking past some of the wild gyrations (and the wilder headlines) of the past year, the broader trends in the Canadian housing market are remarkably calm,” Porter wrote in a note.
“With total sales nudging up from a year ago in 2013 and almost precisely in line with the past-decade norm, most cities sporting a single-digit price gain, months’ supply stable and balanced nationally, we can only conclude that the reality of Canada’s housing market is much more boring than widely advertised.
“And, the moderation in national sales from the summer’s hot level suggests underlying conditions remain well-behaved. Somewhat softer activity in recent months suggests that the recent pickup in prices should also moderate in 2014.”