Home sales and prices expected to fall nationally in Canada in 2017
Property sales in Canada are expected to remain around the same in 2017 with some locations seeing stronger activity than others but sales are likely to fall by around 3% during the year.
Nationally, sales activity is projected to have risen by 6.2% in 2016, a new annual record, up from the previous record 3.3% from annual sales in 2007 but not for all locations.
The national average price is forecast to decline by 2.8% to $475,900 in 2017 with modest price gains near or below inflation in Manitoba, Ontario, Quebec, New Brunswick and Nova Scotia, together with small declines of a similar magnitude in Alberta, Saskatchewan, Prince Edward Island and Newfoundland and Labrador.
The national average price is now projected to rise by 10.5% to $489,500 in 2016, with a slightly smaller gain in British Columbia of 8.1% to $688,300; 8.1% and a larger gain in 15.1% in Ontario taking the average to $535,700.
Elsewhere, average prices are forecast to rise by 2.4% in Manitoba, by 2.5% in Quebec and by 1.9% in New Brunswick. Annual average prices in Alberta, Saskatchewan and Nova Scotia are projected to remain largely stable.
By comparison, the forecast average price increase of 11.6% for Prince Edward Island has been revised upward to reflect an exceptionally strong price gain recorded in the third quarter. By contrast, average price in Newfoundland and Labrador is now forecast to fall by 6.7%.
Prince Edward Island should post the largest annual percentage increase in sales this year with growth of 22.4% while British Columbia could see 10% and Ontario 9%.
Alberta is still expected to record the largest annual decline in activity in 2016 with a fall of 8.1%, followed by Saskatchewan with a decline of 4.6% and annual activity in Newfoundland and Labrador is now anticipated to register almost no change in 2016 as compared to 2015.
Elsewhere, sales are forecast to rise by 4% in Manitoba, by 5.8% in Quebec, by 6.1% in New Brunswick and by 4.9% in Nova Scotia. In the latter three provinces, activity has been slowly but steadily gaining momentum and 2016 is expected to mark a multi-year high for annual sales.
Year on year average price gains have continued to accelerate in Ontario amid strong demand in the face of an unprecedented supply shortage. Meanwhile, average prices in British Columbia have receded due to a sharp decline in multi-million-dollar single detached home sales in the Lower Mainland.
As a result, the projected annual average price for Ontario in 2016 has again been upwardly revised compared to CREA’s previous forecast, while the projected annual average price for British Columbia has again been downwardly revised. As with the revisions to forecast sales, revisions to average price forecasts for these provinces mostly offset each other at the national level.
Average prices appear to be stabilising in Alberta and Saskatchewan but remain down from year ago levels in Newfoundland and Labrador. Average prices in other provinces are either rising modestly or holding steady, reflecting well balanced supply and demand for housing stock.
Looking ahead sales in British Columbia and Ontario are anticipated to remain strong but fall short of 2016’s record levels due to deteriorating affordability, an ongoing shortage of affordably priced listings for single family homes and tightened mortgage regulations.
British Columbia home sales are forecast to decline by 12.2%, while annual sales in Ontario are forecast to retreat by 2.7% while elsewhere the decline will be smaller, with a fall of 1.2% in Saskatchewan, down 2.1% in Nova Scotia, down 2.2% in Prince Edward Island and down 1.4% in Newfoundland and Labrador.
The downward revision to forecast sales in Prince Edward Island reflects unexpected strength in sales this year that is not expected to reoccur in 2017. Nonetheless, sales for the province are expected to remain strong, as its economy should continue benefiting from a weakened Canada to US currency exchange rate, the report points out.
Sales in 2017 are forecast to rise by 3.5% in Alberta and by 1.2% in Quebec. The forecast rise in Alberta’s sales in 2017 mostly reflects slow sales activity in the first quarter of 2016, a repeat of which is not expected. Sales are also forecast to improve modestly in Manitoba by 0.8% and New Brunswick by 1.6%.
While the average sale price in British Columbia is expected to decline by 7.8% in 2017, this largely reflects an anticipated decline in single family home sales activity at the higher end of the market, the report explains, particularly in the Lower Mainland.
The forecast dip in the national average price in 2017 along with a decline in British Columbia is expected to be similar to the trend in 2012, when a more normal year for activity in Greater Vancouver followed record level sales activity for multi-million dollar homes in 2011.
Meanwhile, an ample supply of listings relative to demand is anticipated to keep price gains in check in other provinces, although sales have begun to draw down inventories in provinces where supply had been elevated in recent years, the report concludes.