Canada’s housing market will moderate in 2015 but wide regional differences will remain across the country according to a new forecast out by RBC Economics. This forecast was moderately revised upwards from their previous projections in May due to stronger than anticipated activity.
Housing demand in Canada continues to be supported by factors such as:
- demographics (fairly steady immigration)
- generally upbeat macroeconomic environment
- still-low interest rates despite their project rise
A faltering economy would cause a surge in unemployment resulting in a “much harsher outcome” since RBC believes the market is in a “fairly vulnerable position to withstand an unanticipated shock” because of:
- near-record household indebtedness
- stretched property valuation
- interest rates have little room to drop to offset any shock
Alberta remains at the top of RBC’s rankings for 2015 “thanks to its strong economy and in-migration keeping the demand-supply equation still somewhat tight.” House prices in the province are expected to rise 3.9% in 2015 following a 6.4% increase this year. Alberta is one of only two regions RBC expects to post a rise in sales in 2015 (0.7%), the other being the Atlantic provinces.
You can download and read the entire forecast here.