The slowdown in Canada housing market is set to continue throughout 2012 and 2013, and unlike in the U.S., this cooling will not create a major economic threat, a report released by Canada Mortgage and Housing Corp shows.
The report analyzes market trends for 2012 and 2013 and the forecast is based on data collected by Canada Real Estate Association.
The "Housing Market Outlook" predicts that in 2013 transactions on the resale market will rise, albeit moderately, due to modest increase in interest rates and weak employment growth. However, increase in transaction rates will be more to do with housing stock than demand, the report states.
As for the rest of 2012, the report shows the supply of existing homes will continue the upward trend and active listings will move closer to an average of 27,000 units this year. The 2012 market is set to favor neither sellers nor buyers, therefore ensuring moderate price growth. The average price will increase by 3.5 percent reaching $325,000, compared to a hike of 5.5 percent in 2011.
Interestingly, a substantial increase in price is not expected in 2013, too. It is expected that the average price will attain $330,000 next year and transactions are set to increase by 1.9 percent to 43,200 sales.
“However, the increase in the volume of transactions will be due more to the growth in the housing stock than to an increase in demand. In fact, demand will be curbed by the modest rise in interest rates, which will still remain at historically low levels, and moderate employment growth. On the supply side, 2013 will be much like 2012, as listings will stay on an upward trend, reaching 28,000 units on average,” the report states.
This report is slightly different from CHMC’s earlier report.
“The point forecast regarding housing starts in the latest report is higher than what has been predicted in June and the range is slightly wider. This may be because the data and stats from July have provided a far more clear idea of where the market is heading now,” Marcus Arkan, CEO of Syndicate Mortgages said in a statement.
