Stronger than anticipated sales in Ontario pushed up national activity prompting CREA to amend sales forecast
The Canadian Real Estate Association (CREA) has revised its forecast for residential property sales activity due to a stronger than expected market.
Activity came in broadly in line with expectations across much of the country in the third quarter of 2011 with the exception of Ontario. Sales there came in stronger than anticipated in a number of regions over the summer, but were held aloft mostly by Toronto activity as the third quarter ended, it said.
Stronger than anticipated sales in Ontario pushed up national activity in the third quarter, and prompted CREA to raise its annual sales forecast for 2011 from 0.9% to a revised 1.4%.
‘The continuing strength of home sales activity in the face of ongoing financial market volatility speaks volumes about the confidence of Canadians in our housing market,’ said Gary Morse, CREA’s president.
‘Interest rates look like they’ll remain low at levels that are friendly to the housing market for some time to come, and that’s good news for Canadian home sales activity and the overall economy,’ he added.
CREA forecasts that national sales activity in 2012 will ease by 0.5% to 451,200 units. This represents a small upward revision CREA’s previous 2012 sales forecast, and reflects expectations that Canadian interest rates will remain low until well into next year. Forecast sales for 2011 and 2012 remain roughly on par with the annual average for activity over the past ten years.
The national average price has evolved as CREA expected, with average home prices in Vancouver moderating compared to levels in the first half of the year. Vancouver sales of multi million dollar properties have returned to more normal levels after having shattered a number of monthly records this spring.
CREA’s national average home price forecast for 2011 is little changed at $362,700, representing an annual increase of 7%. In 2012, the national average price is forecast to hold even with the 2011.
‘A number of factors will keep Canada’s housing market in check as interest rates remain low. These include tightened mortgage regulations, high household debt levels, together with slower economic and job growth,’ said Gregory Klump, CREA’s chief economist.
‘That said, with global economic growth expected to remain fragile but positive, employment levels and income growth in Canada should remain supportive for the housing market. Headline news about economic uncertainty has put only minor dents in consumer confidence. How confidence evolves depends on how global turmoil plays out over the coming months,’ he explained.
‘Should global economic headwinds weigh more heavily than expected on Canadian economic prospects, the federal government and the Bank of Canada have made it clear they stand ready to take flexible and measured responses as appropriate. That’s encouraging from the standpoint of the Canadian economic and housing market prospects,’ he added.