Canadian home sales forecast lowered

Photo credit: Jacob Earl

The Canadian Real Estate Association has lowered its forecast for sales in the next year.

The lowering prediction was attributed to tightening mortgage regulations, accompanied by a decline in activity in Ontario and increasing slowdown of transactions in British Columbia.

Indeed, British Columbia's share of nationwide property sales dipped further below its long term average, while Ontario property sales dropped back from levels far above average to sit close to its normal levels.

Housing activity is expected to rise by just 1.9 per cent during the rest of 2012, with Alberta still predicted to lead the market. In 2013, sales will then fall back by 1.9 per cent, the CREA adds, anticipating rate increases during the second half of the year.

The CREA also reduced its forecast for property prices, with values now forecast to rise by 0.6 per cent in 2012 to an average of $365,000.

 "All real estate is local, so housing market prospects can and do differ among regions and communities," commented Wayne Moen, CREA President.

 "Recent changes to mortgage regulations are likely to sideline some potential first-time home buyers, particularly in some of Canada's priciest housing markets," added Gregory Klump, CREA's Chief Economist. "That's likely to result in slower momentum for resale housing activity, with an increase in the amount of time it takes for move-up buyers to sell their current home. Job growth is widely expected to continue at a modest pace while interest rates remain on hold, so the economic outlook is absent the factors that typically result in forced sales and a dramatic swing in prices."