Although the Canadian Real Estate Association (CREA) is predicting that 2016 will see a drop in the average house price in three provinces because of a downturn in the oil industry, Canada’s national average house is expected to edge higher by 1.4 per cent in the year ahead, with Ontario leading the other regions with an increase of 2.9 per cent.
The CREA believes that low interest rates will assist with sales, but t but that the federal government’s recent reforms to mortgage lending rules will have a negative effect beyond its intended targets in the Vancouver and Toronto areas – the most expensive housing markets in Canada.
Sales activity in Calgary’s housing market has been struggling since the drop in oil prices hit its lowest levels since 2009, and is expected to be one of the markets most affected by the higher minimum down payments for properties with an asking price over $500,000. The association expects Alberta’s average housing price will fall by 2.5 per cent, with Saskatchewan following with a 1.2 per cent decrease, and housing prices in Newfoundland and Labrador expected to fall by one per cent.
The overall market increase should come as no surprise, as existing home sales rose 1.8% in November 2015, and are now 10.9% higher than they were a year ago. CREA also noted that sales hit their highest monthly level in over six years in November. For the year, the GTA remained a sellers’ market, with sales up 8% over 2014.
Despite the posts about the general millennial malaise surrounding home ownership, and an increase in “permanent renters”, in the GTA alone, the demand for home ownership remains strong, and, according to the Building Industry and Land Development Association (BILD) the dynamics around the housing supply are impacting prices and redefining the market.
The first 10 months of 2015 saw over 120,000 new and resale homes sold across the GTA, and a record number of sales reported through the Toronto Real Estate Board’s (TREB) MLS® system.
As the country becomes more urban, more and more buyers are moving to home ownership in the suburbs to find affordable homes, and improved suburban transit infrastructure will only fan the flames of interest in settling outside of the city core.
In addition, with the lower Canadian dollar, many global investors continue to see the appeal of Canada as a safe haven for their capital. While first-time buyers in Toronto had better luck in their foray into the housing market with a condo, the price increases for single family homes far outpaced those in the condo market, which also made it difficult for condo owners to trade up. Many high-end luxury homes were sold to local move-up buyers, but to buyers from China and the Middle East as well.