Home sales forecast to rise in 2012
Sales of existing homes in Canada are projected to increase slightly this year, but dip in 2013, the Canadian Real Estate Association said on Monday.
Sales are predicted to rise 0.3% in 2012 to 458,800 nationally, up from 457,305 in 2011, said CREA. The modest increase is attributed to rising demand in Alberta, Saskatchewan and Nova Scotia which is expected to offset declines in British Columbia, Ontario and New Brunswick.
However the trend is expected to reverse in 2013, with national sales dipping 0.3% to 457,200.
“So long as the European debt crisis is contained and a global economic recession avoided, low interest rates will support Canadian home sales and prices,” CREA Chief Economist Gregory Klump said in a statement.
The Bank of Canada will make its next interest rate announcement this week with analysts anticipating no change to the current 1% target, according to a Reuters survey.
On Monday, Finance Minister Jim Flaherty said the Canadian economy should grow modestly and the budget deficit should gradually be eliminated.
CREA also said the average home price this year is expected to fall 1.1% from 2011 to $359,100 down from $363,116 in 2011. In 2013, the average price is forecast to rebound 0.9% to $362,300.
Ten of 14 economists and strategists surveyed last month in Reuters’ first poll on the Canadian housing sector said they expect home prices to stall with a mere 0.1% rise this year, and the same in 2013.
In contrast to the United States, the housing market in Canada has remained robust, though some officials have warned of rising household debt levels while mortgage rates remain low.
“There has been some moderation in the housing market. I remain concerned about the condo market, quite frankly,” Flaherty said on Monday.
“Interest rates are relatively low, so I again encourage Canadians to be careful in the amount of debt they take on in terms of residential mortgages because rates will go up some day and I would not want people to get caught.”
(Reporting by Jon Cook; editing by Rob Wilson)