How will plunging oil prices affect the Canadian housing market?
House prices are expected to increase just “moderately” across Canada this year, led by above average gains in the Greater Toronto area but saddled by uncertainty in the West thanks to slumping oil prices.
House prices gains are likely to slow this year, but still average about 2.9 per cent across Canada, says realtor Royal LePage in its annual house price survey and market forecast released Wednesday.
That would bring the average price of a resale home to $419,318, up from $407,500 in 2014.
The national realtor has now revised its regional forecasts, however, as oil prices continue their slide.
Toronto is expected to lead the pack when it comes to price increases this year, with the realtor saying the average home price in Canada’s largest city is forecast to rise by 4.5 per cent, although that would be well behind last year’s pace.
It anticipates that the shift of economic activity from West to East, combined with the strengthening U.S. economy, could help drive even more demand for housing in the GTA.
That would bring the average resale price of condos and houses combined across the GTA to $592,000 — up from $566,500 in 2014 and $524,089 in 2013.
“We would have taken a more bearish approach to Toronto and the Ontario market had it not been for the sharp change in Canada’s economic conditions,” said Phil Soper in an interview, the president and chief executive of Royal LePage.
Vancouver is expected to see the second-biggest average jump in prices, up 2.8 per cent, followed by a 2.4 per cent gain in Calgary, among several of the major centres surveyed across the country.
“I do believe there are winners and losers, in the short term, both economically and in the housing markets. And one of the places (slumping oil prices) are playing out positively right now is in Central Canada.”
The fallout from oil also makes it less likely that interest rates will rise, as had been expected, sometime this year, noted Soper.
Calgary’s expected 2.4 per cent rise this year is less than half what had been anticipated before oil began its slide. That would still bring the average house price to $472,000 this year.
Calgary had been among the “hot three” Canadian housing markets in 2014 (Toronto and Vancouver were the other two), with detached bungalows up 9.1 per in the fourth quarter of 2014, year over year. Average two-storey homes saw prices jump 8.5 per cent in the fourth quarter. Even condos saw price growth of 9.1 per cent during the quarter, says Royal LePage.
Vancouver’s likely 2.8 per cent gain keeps it firmly in top spot as the most expensive real estate market in the country, according to the national real estate company’s projections for nine major Canadian markets.
That would bring the average Vancouver home price to $835,000, which includes everything from condos to multi-million dollar single family homes.
Edmonton is expected to see gains of 2.5 per cent, followed by Ottawa at 1.8 per cent. House prices are anticipated to largely flatline in Halifax, Montreal and Winnipeg, but decrease by 1.3 per cent in Regina.
Source: Susan Pigg, Toronto Star
