In a research report released yesterday on November’s housing figures, RBC says that “Calgary continued to stand out as Canada’s most buoyant market at the current time,” and that “markets where the economy is strongest, such as Alberta, will outperform.”
For the rest of Canada, RBC is projecting for prices & sales to decline the following couple years:
The eventual rise in interest rates – which we expect to start in the third quarter of 2013 – will exert greater downward pressure on the market when it unfolds.
We expect that such pressure will play a role in causing home resales to drop to 444,000 units in 2013 and more so in 2014 to 432,000 units, from 456,000 units in 2012. We project home prices to decline by 1.5% overall in Canada in 2013 and almost 2% in 2014, reflecting greater choices available to buyers. Local markets where affordability is poor, such as Vancouver, face greater declines.
While activity has cooled “substantially” through the summer, RBC says the Canadian housing market appears to have stabilized the last two months. The question remains:
Is this apparent stabilization signal[ling] a bottom or is simply a pause ahead of further declines. While we recognize the risk of renewed weakness in an environment that is testing buyers’ confidence, we believe that the market is unlikely to crash in the near-term.
The qualifiers “unlikely” and “near-term” gave me pause. Anyways, RBC continues:
Barring any major slippage in the economy, we expect demand for housing to be sustained at or slightly below recent levels in the period ahead, supported by continued employment growth, low interest rates and population gains. These factors will offset the restraining effects of the latest changes in government-backed mortgage insurance rules, somewhat strained affordability, concerns about household indebtedness and global uncertainty.
You can download the entire report here