Canadian property sales set to jump 4% this year
That’s the news from the Canadian Real Estate Association (CREA). The data reflect sales that are stronger than expected, with recent months showing higher performance than experts foresaw. Nevertheless, sales activity is expected to reach a peak in the third quarter as the impact of a deferred spring fades and price increases push down sales by reducing affordability and pricing potential purchasers out of the market.
The increase will see 2014 slightly outperform the 10-year average, while remaining broadly in line with it. In other words, this is a slight improvement on an already healthy business as usual, not a deviation from normality. There have been periods of monthly volatility since the depths of the 2008-9 recession, but annual activity has remained fairly stable. This stability contrasts favourably with the sharp growth seen just prior to the 2008 crash: Canada is undergoing a prolonged period of stable growth, not the run-up to a bubble.
Broken down by region, British Columbia is by far the biggest winner, expected to post an 11.9% year-on-year increase in activity, with Alberta running in second place and expected to show a 7.7% rise. Demand in both provinces is running at multi-year highs, as the desirability of residence in Vancouver or Edmonton combats the downward push of rising prices on demand.
Other regions are not posting such success stories, though. In Saskatchewan, Manitoba, Ontario, and New Brunswick, activity is expected to remain in line with 2013 levels and sales will increase in the range between 1% and 2% – lower in Ontario and New Brunswick than in Manitoba and Saskatchewan.
And some provinces are not sharing in the sales boom at all. In Nova Scotia and in Newfoundland and Labrador, sales are down by 3.9% and 5.2% respectively, providing a rural mirror to the urban boom that pushed up the national statistics.
The national average price has largely followed predictions since the spring, and is currently forecast to rise by 5.9% to $405,000 by the end of 2014, again with rises concentrated in British Columbia and Alberta. Ontario is expected to experience a similar rise, while Saskatchewan, Manitoba, Newfoundland and Labrador are expected to see rises of only about 1%. Quebec isn’t expected to manage more than half that, while prices in New Brunswick are forecast to flatline, and in Nova Scotia CREA expects them to fall by as much as 2%.
Longer range forecasts see prices rising more slowly next year, up by 2% in Alberta and Newfoundland and by more modest amounts elsewhere, in line with the trend of both price and sales growth being concentrated on Canada’s prosperous West Coast.
Although the rises are expected to be transitory, sales have yet to show signs of cooling. Activity has strengthened over the summer, rather than relapsing as expected following a spring boom thought to be attributable to Canada’s unusually bad winter. The large urban markets that originally drove the spring rebound continue to dominate, while rural markets have continued their slide.
Source: Les Calvert of www.property-abroad.com
