Unlike TD’s recent housing forecast, RBC is predicting that house prices in Alberta will rise over the next two years. However, the two banks are in agreement that sales will fall over that period.
In their latest forecast from earlier this month, RBC is expecting that Alberta home prices will increase 1.7% this year and then only 0.1% in 2016.
Meanwhile, sales are projected to drop -6.5% in 2015 and then -9% more in 2016.
The report states in part:
“A drop of 6.5% in home resales no doubt would serve a blow to the Alberta market; yet, this would unlikely result in a knock-out punch. Markets such as Calgary and Edmonton start from very strong positions, whereby demand currently exceeds supply—both clearly were sellers’ market in the late stages of 2014.
“If anything, the cooling effect on homebuyer demand from oil prices averaging US$65 in 2015 would contribute to re-balancing demand-supply equations in the province in the near term. Under such conditions, we expect further price increases in Alberta in 2015, albeit at a much slower pace (1.7%) than in 2014 (5.7%).
“We will monitor closely a recent surge in new listings in Calgary for any signs of a loss of confidence. The steep fall in oil prices below our assumption for the year clearly raises downside risks in Alberta.”
It’s important to note that the forecast assumes average oil prices will be $65/bbl in 2015 and $74 in 2016, while the unemployment in Alberta will remain under 5%.
To download entire report, click here