Property sales and prices in Canada set to rise in 2014, according to CREA forecast

The Canadian Real Estate Association (CREA) has updated its forecast for home sales due to  stronger than expected activity through the summer and early autumn months.

Although monthly sales volatility has increased in recent years, particularly surrounding changes to mortgage rules, national activity on an annual basis has remained remarkably stable, it says in its latest report.

It points out that for the sixth consecutive year, annual sales in 2013 will remain within short reach of 450,000 units. Activity and prices have remained slightly stronger than expected in Western Canada. By comparison, the sales and pricing environment has generally been softer in Eastern Canada.

Sales are projected to reach 458,200 units for the year. This represents an increase of eight tenths of one per cent from last year.

Sales projections have been revised slightly upward for British Columbia, Alberta, Saskatchewan, Manitoba, and Ontario. Previously, British Columbia and Alberta were the only provinces where forecast annual sales for 2013 were expected to top 2012 levels. Ontario sales are now also projected to increase marginally.

In 2014, national activity is forecast to climb to 475,000 units, growth of 3.7%. Most of the increase reflects the weak start to 2013, which is not expected to recur in early 2014.

British Columbia is still forecast to post the strongest sales increase in 2014 of 8.4%, reflecting the return to of activity to more normal levels compared to a weak start to the year in 2013. Most other provinces are forecast to post gains in the range between 2% and 4%.

CREA also says that average prices have remained firmer than expected, in large part due to a rise in the share of national sales among more active and pricier markets as compared to last year.

The national average home price is projected to rise by 5.2% to $382,200 in 2013, with similar gains in the Prairie provinces, Ontario, and Newfoundland and Labrador. Smaller gains are projected in other provinces.

‘Most housing markets are well balanced, including many large urban centres. Housing price gains are always stronger in places where supply is tight relative to demand, such as we’re seeing in Calgary and in parts of southern Ontario including the low rise market in Toronto. Prospects for price appreciation will be limited in parts of Quebec and some areas in the Maritimes, where competition among sellers has increased,’ said Gregory Klump, CREA’s chief economist.

The national average price is forecast to rise a further 2.5% in 2014 to $391,100. Klump pointed out that as with sales activity, much of the increase reflects prices that were still being skewed lower in the first quarter of 2013 after having softened in late 2012.

Alberta is forecast to post the biggest rise in average price in 2014 at 3.4%, with gains in Saskatchewan, Manitoba, and Newfoundland and Labrador running just ahead of overall consumer price inflation, and the average price increase in Ontario running just below it.