Canada’s resale housing market will edge past 2005 sales statistics to set new records in 2006, according to a revised forecast prepared by the Canadian Real Estate Association.
After setting the fifth consecutive annual record in 2005 at 483,233 units, CREA expects national resale housing activity to reach 483,265 units in 2006, an increase of less than 0.1 per cent. Activity is then projected to ease by 4.8 per cent in 2007 as sales return to more
Locally, the Winnipeg Real Estate Board is predicting MLS® dollar volume sales will set a new record this year.
Dollar volume sales stood at $1.5 billion at the end of September which is well ahead of the previous record pace set in 2005.
CREA is now predicting that 2006 MLS® sales in Manitoba will reach 12,910 units, an increase of 1.2 per cent over 2005. The forecast for 2007 is a decrease of 1.9 per cent to 12,660 units.
After climbing 10.2 per cent in 2005, CREA projects that the national MLS® residential average price will increase by 11.4 per cent in 2006 and six per cent in 2007.
The residential average price for
Manitoba is predicted by CREA to rise by 12.5 per cent this year to $150,600 when compared to 2005. In 2007, the average price is forecast to increase to $164,300 which would be 9.1 per cent greater than 2006.
CREA said annual increases in average price will remain below 10 per cent in all provinces in 2007.
Housing markets in the Western provinces will remain tightest, with prices increasing at double the rate of other provinces.
“The large price gains in Western markets will begin to shrink next year as housing markets in those provinces
become more balanced,” said CREA chief economist Gregory Klump. “Price increases become leaner as the housing market becomes more balanced, but it takes time for them to respond to changes in market balance.
“Some listings are also staying on the market longer as buyers view a broader selection of homes before making a purchase decision.”
In Winnipeg , listings rose by 15 per cent in September, which provides greater choice for potential home buyers, added WREB president Walter Boni.
A gradual decline in sales activity and an increase in new listings is causing many housing markets across the
country to become more balanced, which has begun to temper price increases, according to CREA.
CREA expects this trend to continue over the rest of the year and into 2007.
When the Bank of Canada decided to hold its trend-setting overnight lending rate on September 6, it identified a faster than expected slowdown in U.S. consumer spending as a downside risk to Canadian economic growth.
“Weaker U.S. economic growth is good news for Canadian interest rates, as slowing Canadian economic growth will keep mortgage interest rates low and the housing market on a solid footing,” said Klump. “Home sales activity and household spending stand to benefit if the Bank of Canada cuts interest rates to shore up Canadian economic growth."
“High employment, upbeat consumer confidence and rising incomes continue to keep the fundamentals strong for housing activity in Canada,” he added. “The
regional differences in economic strength that played out this year in Western provinces compared to the rest of Canada are expected to persist next year.”