In their Economic & Financial Outlook released today RBC says Canadian housing is to experience “sustained weakening in activity albeit at a modest pace,” in the near-term.
The new mortgage rules in July “amplified” the pullback that was already underway but other factors including stretched affordability relative to historical averages, high levels of household indebtedness relative to incomes, and global uncertainty will be underlying causes of the slowdown. On the plus side, some of this will be offset by interest rates remaining at their historically low levels. All in all, RBC “look(s) for lower resale activity and home prices in Canada in 2013 and 2014.”
You can download the entire report here
Alberta Booming But Risks Remain
Also released today was their Provincial Monitor and the situation is looking quite positive for Alberta. The report reads:
Alberta’s economic boom will barely miss a beat in 2013 despite increasing challenges in delivering rapidly expanding oil production to markets. We expect Alberta to continue to be among the faster growing provincial economies—a position that it has held for the past three years—with a real GDP growth rate of 3.5% in 2013 or just slightly off the 3.8% forecasted rate for 2012.
While the catalyst for the current boom—massive investment in the energy sector—has been tempered, strong capital expenditures outside energy and rapid momentum in other sectors of the economy will keep things moving along at a sustained rapid clip in the year ahead. The outlook for 2014 looks even stronger with growth in investment in the energy sector expected to resume.
Want some more good news? The report continues by stating that “employment growth in Alberta easily outpaced the rest of the country, while the rate of unemployment fell to a nationwide low. Good job prospects attracted more people to live in the province, and rising net in-migration boosted population growth to a five-year high. Alberta’s housing market picked up steam, which led to a 25% surge in new home construction.” (RBC forecasts that housing starts will slowly slightly in 2013 & 2014)
That’s the good news, but RBC warns that the mood in the province remains far from exuberant. Read the report on Pg 3 to find out why.