CREA housing forcast
Sales head for new annual record
Canada's resale housing market remains on track for its best year on record, according to a revised forecast prepared by The Canadian Real Estate Association (CREA).
CREA predicts 484,025 properties will be sold through the Multiple Listing Service® (MLS®) in 2005 – up 5.0 per cent from a record 461,112 sales in 2004 and its fifth consecutive annual record.
Exceptionally strong sales in the second and third quarters of 2005 will also push MLS® home sales to new annual records in British Columbia, Alberta, Manitoba, Ontario, Quebec and New Brunswick. Seasonally adjusted national MLS® homes sales hit 126,890 units in the third quarter of 2005 – their highest quarterly level on record and up 3.3 per cent from the 122,860 units sold in the second quarter of 2005.
“Sales momentum picked up during the third quarter, setting a new monthly record for sales activity in August. Transactions are still running exceptionally high, but small interest rate increases are beginning to bring sales activity back to earth in a number of major markets,” said CREA's Chief Economist Gregory Klump.
“Sales activity is forecast to gradually trend lower as interest rates creep higher next year. Even though transactions through the MLS® are forecast to ease, they are expected to reach their third-highest annual level on record in 2006,” predicted Klump.
“The housing market will become more balanced as additional expected housing price and interest rate increases cause sales activity to edge lower next year. Price gains will be more modest in 2006 as the market becomes more balanced,” he added.
The CREA forecast estimates the annual MLS® average home price in Canada will be $256,200 in 2005, up 13.2 per cent from 2004. This is its biggest annual increase since 1989 and its seventh consecutive annual record. The annual MLS® average home price will increase by a further 5.0 per cent to $269,000 in 2006. “Mortgage interest rates are expected to remain within one per cent of current levels in 2006, so many homebuyers will still be able to finance more expensive home purchases,” added Klump. (CREA 23/11/2005)
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