Home sales rose Canada-wide for the sixth straight month in August, leading one of the country’s largest real estate industry groups to increase its 2019 sales forecast on the back of the sustained strong results.
According to Canadian Real Estate Association (CREA) data and commentary released last week, the impacts of the new mortgage rules introduced in 2018 are running their course and the market adjustment is entering a new stage that will see more sidelined buyers return to the market.
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The five percent annual sales growth recorded in August and positive overall economic outlook prompted TD economist Rishi Sondhi to note that the Canadian housing recovery still “has further room to run” into 2020.
“The beneficial combination of solid job markets, rising household incomes, healthy population growth, further distance from restrictive government policies and low mortgage rates have given a boost to demand,” Sondhi writes in a housing note published by TD Economics last week.
“And, with sales still somewhat low compared to population and employment levels, the recovery likely has further room to run. Our forecast anticipates positive sales growth through next year, contingent on the economy and job markets holding up,” he continues.
The outlook has certainly improved for the Canadian housing market since the tumult experienced in 2018 following the extraordinary ramp up in sales activity and prices through 2017 that eventually spurred intervention from the federal government as well as the two provincial governments home to the country’s hottest markets — Toronto and Vancouver.
That said, Sondhi cautioned that even as the strength exhibited over the last six months has caused housing markets to tighten across the country, growth expectations in Canada’s most expensive markets should be tempered by existing affordability challenges that will cap price gains.