Canada’s Housing Market to Be More Stable in the Next Two Years: RBC

CBC News posted this article on Thursday, February 10, 2011. Click here for the full RBC Resale Housing Market Outlook.

Canada’s housing market is likely to be far more stable in the next two years than it has been for the last two, the Royal Bank of Canada said in a report on Thursday.

The housing market since 2008 was shaped by truly exceptional events and factors such as the global financial crisis, a major recession that destroyed nearly 430,000 jobs in Canada, cuts in policy interest rates to the lowest levels in a generation, the introduction of a harmonized sales tax in Ontario and British Columbia, and the tightening of mortgage rules, RBC’s senior economist Robert Hogue said.

“With the economy (both global and national) on a more solid footing now, the road ahead will be less bumpy,” he said.

But there will be regional variances, the bank expects. With Saskatchewan, Alberta and Manitoba seen leading economic growth among the provinces in 2011, demand for housing will similarly outpace that of other provinces. A slowing housing market is possible in areas east of Manitoba.

The bank expects home prices to rise in all provinces, but at a very slow pace in most cases in 2011.

On average, the bank is forecasting price gains of 0.5 per cent in 2011 and 1.3 per cent in 2012. That compares with a very strong, but unevenly distributed, 8.3 per cent gain in 2010.

“In our opinion, the Canadian housing market is on path towards mostly flat levels of resale activity and minimal price increases this year and next,” Hogue wrote.

Earlier this week, the Canadian Real Estate Association forecast the national average price is now expected to rise by 1.3 per cent in 2011 to $343,300.