Brighter days are ahead for the Canadian housing market.
With the unemployment rate falling, population growth holding strong, and interest rates on pause, the Canadian Real Estate Association (CREA) has upwardly revised its 2019–2020 forecast for home sales and prices.
CREA expects home sales to total 463,000 by year’s end, representing a 1.2 percent increase over 2018. In the association’s previous forecast published this March, it was calling for a 1.6-percent decline to 450,400 sales.
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For 2020, CREA predicts sales will climb even higher, rising 4.4 percent annually to 483,200. Beforehand, the forecast was for a 2-percent increase, with a projected 459,400 homes changing hands.
Measures outlined in the 2019 federal budget are going to give the national market a shot in the arm. Of particularly help will be the First-Time Home Buyer Incentive, a shared-equity mortgage scheme, and increasing the maximum RRSP withdrawal amount to $35,000 for the purchase of a home.
“These factors are expected to support… the beginnings of a recovery in home sales over the second half of 2019 after starting this year on a weak footing,” says CREA in the forecast.
However, mortgage stress testing is a factor keeping sales below higher levels seen in past years, CREA suggests. “This is particularly the case in pricier areas where younger buyers have had little choice but to borrow more to get into the market.”
For pricing, CREA anticipates the average selling price of a Canadian home will be $485,200, down 0.6 percent year-over-year, before rebounding by 0.9 percent to an average of $489,800.
In March, CREA was predicting a 0.2-percent drop this year and a 0.8 percent increase in 2020.
“Average price trends across Canada in 2020 are generally expected to be more moderate versions of those in 2019, with small declines in British Columbia, Alberta, Saskatchewan and Newfoundland and Labrador, and modest gains in all provinces from Manitoba through the Maritimes,” says CREA.