BMO: Calgary & Edmonton Housing To Lead The Way in 2012, Assuming…

In a forecast for 2012, BMO says that the Calgary & Edmonton housing markets will lead the way, “assuming oil prices hold around $90 or better.”

Looking back on 2011, the report says:

“The award for most well-behaved market is a tie between Calgary and Edmonton, which have seen stable prices in recent years even as Alberta easily recorded the strongest employment growth in the country in 2011.”

This is in contrast with Vancouver who BMO predicts will not be the hottest housing market in Canada in 2012.

Despite the intense focus on the city as a bubble candidate as far back as 2010, Vancouver still saw the biggest average price increases (+16%) and the biggest real estate volume gains (sales & price gains combined) in Canada this year.  That won’t be repeated next year—there are already clear signs that sales are dipping, and price increases are starting to ebb.

Toronto has seized the mantle of hottest major market in recent months, and appears to be at some risk of overheating.

Other highlights in the report, not specifically related to housing:

  • Canadian inflation rose at the fastest pace in 20 years in 2011. With one month to go, it looks like the consumer price index will rise by almost 3% this year, the fastest annual increase since 1991 (the year of the GST and the year the Bank of Canada began targeting inflation.)
  • The Bank of Canada will have its longest period of inactivity since the 1950s… there likely is more chance of a BoC rate cut than a hike in the next year…But note that the Bank of Canada was the only G10 central bank that did not take any easing steps whatsoever in 2011. If the BoC does stand aside, that would leave rates on hold for at least 28 months, the longest stretch of stable Canadian interest rates since the early 1950s (the Bank Rate was constant from late 1950 until early 1955).

Read the entire report here

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