A new report today from TD Economics says that Canada’s housing market appears set for a moderate correction, with resale activity and average prices projected to decline by roughly 15.2% and 10.2%, respectively, over the next two years.
Economists Derek Burleton and Sonya Gulati state that restrained economic growth, higher interest rates, new mortgage borrowing rules and eroding home affordability are the supporting reasons for a moderating housing market.
Toronto and Vancouver are expected to see a larger than average correction in both sales and prices relative to other regions, given their recent run-up in activity, new condo supply and only subdued economic growth.
A Different Viewpoint
“I get asked with all those cranes in the sky, is there going to be a glut of supply? But if you look at the city planners’ projections for demand versus projects on stream, we still don’t have enough condominium projects underway in our big cities,” said Phil Soper, chief executive of Royal LePage, one of the country’s biggest real estate brokerages (Source: Calgary Herald July 12, 2011)
Calgary Will Be An “Out-performer” – But It’s All Relative
Over 2011-13, Calgary, Edmonton and Regina housing markets are set to lead the way. Still, the term “leader” is relative as no market is slated to experience a boom over during the course of the forecast. TD simply has these regions doing better than the rest.
To put it in context, Calgary average house prices are expected to rise a meager 0.5% in 2012 with sales increasing 1.6% over 2011.
Here are the average price forecasts for 2012 (YoY % change)
St. John: -1.2%
A more detailed look at the Calgary market can be found in Page 7 of the special report.