According to recent data, the Canadian real estate market has performed surprisingly strongly compared to a year earlier, and prices have increased more than anticipated. In fact just recently there were concerns that the housing market could be in trouble, but seasonally adjusted sales have exceeded their 10 year average.
The article in the Globe & Mail shows that prices are also proving more resilient than expected. The data for August has resulted in the Canadian Real Estate Association increasing its forecasts for both prices and the number of houses that will change hands this year, although the CREA thinks some of the market strength is due to buyers with pre-approved mortgages choosing to purchase before interest rates rise any further.
In June the CREA forecast sales of 443,400, but has increase that figure to 449,900. Before this recent revision, this forecast was cut three times due to the sales slump that resulted from the stricter mortgage insurance rules introduced by Ottawa last year. According to the CREA, sales for August were up 2.8% higher than for July. In spite of this good news, the forecast for national home sales in 2013 is still 1% lower than for 2012, and only the provinces of Alberta and British Columbia are expected to see increased sales levels this year.
It’s anticipated that the national average home price will increase to $376,300 this year, a rise of 3.6%, and the national average sales price for August was $378,369, 8.1% more than a year ago. However if pricier markets such as Vancouver and Toronto are taken out of the equation, then national average prices have risen by 4.8%. Data from the MLS Home Price Index shows prices are up by just 2.9%.
According to an economist from the Bank of Montréal, sales for this year appear stronger due to reduced sales numbers last year, but overall recent sales figures are healthy when compared to historical levels. In spite of this it anticipates that the improvement in sales activity probably won’t be sustained later on in the year due to mortgage rates which have increased by nearly 1%.