Residential property sales in Canada have fallen since the introduction of new mortgage lending regulations, according to the latest analysis from the Canadian Real Estate Association (CREA). Demand has remained at lower levels, and this trend is expected to persist through the end of the year and into 2013.
National resale housing activity is now projected to reach 456,300 units in 2012, a 0.5% decline from 458,412 sales in 2011, and some 0.9% below the 10 year average. Alberta is still expected to post the biggest annual increase this year, up 13.1%, offsetting most of the projected decline in British Columbia of 10.7%.
However, overall CREA is predicting that property sales activity is expected to be less volatile next year than it was in 2012. In 2013, CREA forecasts that national sales activity will fall by 2% to 447,400 units. This is a slightly lower level of activity than previously forecast, reflecting the ongoing impact of new mortgage rules into next year.
CREA also says that the continuation of moderate economic, job, and income growth will temper the impact of recent mortgage rule changes, which are not expected to dampen activity much more than has already been felt – at least until interest rates are expected to begin rising in late 2013. ‘Annual sales in 2012 reflect a stronger profile prior to recent mortgage rule changes followed by weaker activity following their implementation,’ said Gregory Klump, CREA’s chief economist.
‘By contrast, forecast sales in 2013 reflect an improvement from levels this summer in the immediate wake of mortgage rule changes. Even so, sales in most provinces next year are expected to remain down from levels posted prior to the most recent changes to mortgage regulations,’ he added.
Quote from PropertyCommunity.com : “Residential property sales in Canada fell by 1.7% in November compared with the previous month at a time when mortgage lending tightened, according to the latest data from the Canadian Real Estate Association (CREA).”
The national average home price is projected to rise by 0.3% to $363,900 in 2012, with gains in excess of that in most provinces. CREA said that the smaller gain in average prices nationally as compared to most provinces largely reflects a decline in sales activity among more expensive housing markets compared to 2011, particularly in British Columbia and more recently in Ontario.
The national average price is forecast to edge up another three tenths of one per cent to $365,100 in 2013, with British Columbia, Ontario, and New Brunswick registering small price declines and modest average price gains in line with or below inflation in other provinces.