In the Canadian Real Estate Association’s (CREA) recently updated forecast for home sales activity via MLS®, Manitoba’s housing sales this year are expected to remain roughly in line with 2013.
The national association also expects a modest average price gain in Manitoba this year, but is predicted to rise by two per cent in 2015.
CREA’s updated forecast is similar to the one made at the start of WinnipegREALTORS®.
Real estate market activity began slowly this year due to extraordinarily bleak winter weather. The rise in newly-listed properties in April and May supported an increase in sales activity.
The deferral of sales and listings reflects a delayed start to the spring home buying season, with combined sales for the period from March to May coming in largely as anticipated and at average levels. These deferrals are now likely to have been largely depleted, which suggests that the strength of sales momentum heading into the summer may be transient.
“But locally, we’re pretty optimistic we’ll have a good June,” said Peter Squire, the market analyst for WinnipegREALTORS®, as a result of a healthy supply of listings now available.
CREA’s forecast for sales activity in 2014 is largely unchanged from its previous forecast published in March. At that time, interest rates had been expected to start to edge higher in the second half of the year. However, it now appears that interest rates may not begin to rise until closer to the end of the year, which remains supportive for home ownership affordability over the balance of 2014.
Sales are forecast to reach 463,400 units in 2014, representing an increase of 1.2 per cent compared to 2013. This is little changed from CREA's forecast of 463,700 sales (rising 1.3 per cent) published in March.
Activity is still expected to remain in line with its 10-year average and to hold within fairly short reach of 450,000 units for the seventh consecutive year.
British Columbia is forecast to post the largest year-over-year increase in activity at 8.3 per cent, and make the biggest contribution to the increase in national sales activity.
It should be noted that the higher sales and price levels in Canada’s major centres of Vancouver and Toronto tend to skew national averages.
Alberta's annual sales are projected to rise by 3.8 per cent in 2014, while activity in Saskatchewan and Ontario is expected to be roughly at 2013 levels. Sales are forecast to fall by 1.7 per cent and Quebec, 4.2 per cent in New Brunswick in 2014, 5.1 per cent in Nova Scotia, and by 2.6 per cent in Newfoundland and Labrador.
In 2015, the outlook for the economy, jobs and incomes is one of further improvement, accompanied by a slow and gradual increase in fixed and variable mortgage interest rates.
For Manitoba, the Conference Board of Canada’s recent forecast of gross domestic product (GDP) growth is 2.1 per cent for 2014, which it predicts will be fourth best among the provinces. It’s three-10ths of a percentage point higher than the board’s forecast in March.
According to CREA, sales in relatively less affordable housing markets are likely to be more sensitive to higher fixed mortgage rates, whether from the standpoint of higher monthly mortgage payments or qualification for mortgage financing based on the posted five-year mortgage interest rate. As such, provinces east of Ontario are expected to post the largest gains in activity in 2015 in the range of around 2.5 to five per cent.
National activity is now forecast to reach 467,800 units in 2015, representing a further annual increase of 0.9 per cent. Average prices have remained firm and continue to reflect a rise in the share of national sales among some of Canada's most active and expensive markets compared to last year. The average home price is now projected to rise by 5.7 per cent to $404,300 in 2014, with similar sized gains in British Columbia, Alberta and Ontario. More modest changes in average prices are forecast for all other provinces this year.
The national average price is forecast to edge up a further 0.7 per cent in 2015 to $407,300. Alberta and Manitoba are forecast to post average price gains of two per cent in 2015, followed closely by Ontario at 1.2 per cent. Average prices in all other provinces are forecast to remain stable, edging up by less than one percentage point.