A new forecast out from Scotia finds that Canada’s housing market is becoming better balanced which will result in no change in y/y sales volume (0%) with prices inching up only marginally (+2%) in 2012.
Canadian housing activity remains quite buoyant, but is settling onto a more sustainable path. Almost 457,000 existing homes changed hands last year, up only marginally from 2010 and in line with the 10-year average. Average home prices leveled off in the second half of 2011 following strong early year gains, mirroring the emergence of more balanced resale conditions in the majority of local markets, but remain near record highs.
Historically low interest rates have maintained affordability despite high home prices. Nonetheless, a slower pace of hiring could cool demand somewhat this year. We expect sales volumes and average prices to be relatively flat in 2012. Housing starts edged up last year to 194,000 units, with a decline in single family home construction offset by a sharp rise in multi-unit starts.
Construction intentions remain firm, though more balanced resale markets, slowing price appreciation and an elevated level of unsold multi-unit inventory should slow the pace of building this year.
We expect starts to total around 190,000 units — still slightly above underlying household formation — in 2012.
The outlook for renovation spending, which rivals new construction in total dollar value, is likewise relatively flat.
Regarding the commercial real estate sector:
Canadian office market conditions have tightened in most major centres over the past year, with Calgary witnessing the most dramatic turnaround on the back of a resurgent resource sector. Demand continues to favour high-quality downtown space over suburban markets. The national central office vacancy rate fell to 5.4% in 2011Q4, down almost 2 percentage points from a year earlier and roughly 3½ percentage points below its long-term average. Rental rates, meanwhile, have begun to firm up.
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Local Market Conditions
In Q1 2012, Calgary residential sales and average prices respectively:
Single family homes: +12.40%, +1.11%
Apartments: -0.43%, -0.60%
Townhomes: +6.17%, +2.08%
Mike Fotiou is an Associate Broker with First Place Realty and is registered as a Certified Condominium Specialist and Commissioner for Oaths in the Province of Alberta. Whenever you’re ready to buy or sell real estate, please call 403-554-2284 or email at: firstname.lastname@example.org