In their latest economic outlook, RBC projects Canada’s GDP will grow by 1.8 per cent this year and 2.6 per cent in 2016. The bank says the outlook reflects “a positive read on expectations for consumption and housing.”
Housing? But what about those markets that have been hit hard by falling oil prices? RBC says a recent rise in sales suggests “oil-producing provinces may have hit their lows early in the year.” However, the bank cautions that given the uncertainty surrounding the near-term outlook for the price for oil, “another round of selling cannot be ruled out.”
Still, RBC says the rebound in sales activity that oil-producing provinces experienced in March and April is likely to continue, resulting in overall sales rising 1.5 per cent and prices increasing an average of 3.8 per cent nationally in 2015.
But for 2016, a combination of house price increases and rising interest rates will put more stress on affordability levels and “resale activity will begin to soften,” the bank says. For more, we take a look at a few of the provincial highlights from the report:
While home sales picked up this spring from the depths they reached during the winter months, RBC says that more importantly, new listings reversed much of the uncertainty-driven surge recorded late last year, “thereby suggesting that confidence in the housing market is returning.” Still, the banks says the Alberta housing market remains vulnerable to deterioration in the province’s employment situation. Given historically low levels of activity year to date, RBC projects home resales will fall significantly on an annual basis in 2015 while housing starts will drop from 41,600 units in 2014 to 31,200 units in 2015.
The housing market in BC is hot and getting hotter, RBC said in its report. “A fiery pace of housing market activity showed no signs of abating thus far in 2015, with home resales surging to the highest level since 2009 in the first quarter.” Incidentally, the bank projects BC will lead all provinces in economic growth this year and next, with the GDP rising three per cent in 2015 and 3.1 per cent in 2016.
The banks says indicators suggest that Ontario households have felt good enough about their outlook to make major purchases so far this year. This was certainly the case for buying existing homes, where units sold tracked more than 12 per cent above year-ago levels during the first four months of 2015. “In all likelihood home resale activity might have been even stronger had more homes been available for sale in major markets such as Toronto,” RBC says.
For more, the complete provincial report can be seen here.