After shattering records in 2005, home prices in Canada are expected to moderate in most major centers next year, according to a report released today by RE/MAX Ontario-Atlantic Canada and RE/MAX of Western Canada.
The RE/MAX Housing Market Outlook 2006 report found that the vast majority of major Canadian markets surveyed are expecting modest price appreciation ranging from 2 percent to 5 percent in 2006. The only exceptions are Vancouver, Kelowna, and Calgary, all of which are forecast to experience price increases of about 10 percent next year, the companies reported.
Projections for average prices range from no increase in London-St. Thomas, Ontario, to a high of 10 percent in the Western Canada markets. Home sales in all but seven markets (Victoria, Kelowna, Toronto, London-St. Thomas, Kitchener-Waterloo, Montreal and Halifax) are expected to either exceed or hold steady with record 2005 levels.
Nationally, home sales are forecast to climb 2 percent by year-end 2005, to 472,100 units – the best year ever for housing in Canada. Average price appreciation is expected to post a 9 percent gain, bringing the value of a Canadian home to $246,600.
“Affordability has certainly been a major concern, particularly in markets in British Columbia and Alberta, where average price has experienced strong upward momentum throughout 2005 due to tight inventory levels,” said Elton Ash, regional executive vice president at RE/MAX of Western Canada. “An influx of new listings in the marketplace should ease some of the upward pressure on housing values and allow purchasers the luxury of time when buying a home.”
The highest percentage increases in unit sales are expected to occur in Western Canadian markets next year, the RE/MAX offices reported. Edmonton and Regina are predicted to lead the country with a 5 percent increase over 2005 levels, and 61 percent of all markets forecast activity in 2006 to be on par with the previous year’s figures.
Strong economic fundamentals are expected to contribute to healthy residential real estate activity yet again in 2006, according to the report. Western Canada, Newfoundland, New Brunswick and Nova Scotia, in particular, are expected to benefit from thriving oil and gas-related industries. Nationwide in Canada, billions of dollars have been earmarked for non-residential construction.
Immigration is also forecast to play a greater role in housing markets across the country, the companies announced. Canada is opening its door to as many as 255,000 new immigrants in 2006 and that figure may be ramped up in the future. Typically, household formation among new immigrants takes place within five years of arrival.
“Canada’s economic engine continues to fire on all cylinders, outperforming expectations at every level,” said Michael Polzler, executive vice president and regional director at RE/MAX Ontario-Atlantic Canada. “Consumer confidence levels are strong. Even the Bank of Canada’s effort to put the brakes on the economy – boosting interest rates one half of one percentage point in a two-month period – only served to bolster home-buying activity. Interest rates could climb as much as two percentage points before we see any real impact on the housing market.”
RE/MAX has about 15,500 sales associates and about 605 independently owned and operated offices in Canada. The RE/MAX franchise network, now in its 32nd year, has operations in 58 countries.
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