What Canadian housing market experts are predicting for 2017
Photo: Rennett Stowe/Flickr
It’s not particularly festive, but it’s a holiday tradition for followers of the Canadian housing market nevertheless.
Experts have been busy putting together their forecasts for next year as the final weeks of 2016 pass by.
Here’s what economists, analysts and realtors suggest 2017 will look like for residential real estate across Canada.
Real estate company RE/MAX estimates the average price of a Canadian home (including condos) will climb 2 per cent next year, roughly in line with RBC’s November forecast for 2017, which pegs next year’s aggregate home price at $448,900.
The Greater Toronto Area and Greater Vancouver are major forces behind much of the national price growth. Gains in these markets are forecast to slow next year, according to RE/MAX’s 2017 Housing Market Outlook.
The brokerage chain, which operates out of 67 countries, estimates the average selling price of a GTA home rose 17 per cent to $725,857 from January to October this year, ahead of a smaller anticipated increase of 8 per cent in 2017.
For Greater Vancouver, RE/MAX says prices climbed 13 per cent from January to October to $1,020,300 and will inch up another 2 per cent the following year.
The weaker performance of energy-dependent regions — which diverges from relatively stronger markets in Toronto and Vancouver — is generally expected to continue.
“It’s not really unpredictable,” Christopher Alexander, regional director of RE/MAX INTEGRA, Ontario-Atlantic, tells BuzzBuzzNews of the national market patterns.
Home prices will remain flat in large Prairie markets Edmonton, Saskatoon and Regina over the next 12 months, RE/MAX says.
Residential real estate sales
Home ownership is “part of the Canadian dream,” Alexander explains, suggesting this will help sustain demand for ownership housing.
“We’ve got a lot of great qualities in this country. Unemployment’s really low overall, so people are continuing to buy, and half of Canadians want to buy something within the next five to ten years, so there’s still adequate demand,” he continues.
From January to October, 99,354 homes changed hands in the GTA, the country’s most active market, and RE/MAX predicts sales to edge 5 per cent lower next year.
A combination of more-expensive home prices, lower inventory and higher mortgage rates will temper activity.
Nationally, RBC says home sales totalled 527,900 this year. Activity will fall to 467,100 units, an 11.5 per cent drop, in 2017, the bank says.
Last month, RBC and TD Bank raised fixed mortgage rates, although the Bank of Canada this week announced it was holding the overnight interest rate at 0.5 per cent. Policymakers previously mulled a further cut. No further rate announcements are scheduled for 2016.
Capital Economics sees the bank sending a different message next year. “We expect a more pronounced downturn in housing activity to prompt the bank to cut interest rates to 0.25 per cent,” writes David Madani, the firm’s senior Canadian economist, in a research note.
BMO views the near-term future in a different light. “With fiscal policy expected to kick in more obviously in Canada as well as the US next year and oil prices seemingly holding a firmer floor with the OPEC deal, the [central] bank appears perfectly content to stay on hold,” notes BMO Chief Economist Douglas Porter.
That hold will persist throughout 2017, he expects, with a potential rate hike on the horizon in 2018.
Desjardins also says the central bank will maintain the status quo for at least another year. “It is worth mentioning that economic conditions have improved in recent weeks,” Benoit Durocher, a senior economist at Desjardins states in an economic study.
Durocher cites a 3.5-per-cent Q3 rebound in real GDP, job creation, heightened consumer confidence, and potential stimulus from federal spending on infrastructure, a pillar of Prime Minister Justin Trudeau’s campaign.