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RBC Economic Research - Canadian Housing Market Forecast

Tina Myrvang

Client Care Lead
Staff member
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Joined
Nov 15, 2010
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We have just released our latest edition of Canadian Housing Market Forecast.

Highlights

After the fireworks of 2016 and 2017 that propelled property values by an average of nearly 10% per year, a much tamer pricing environment is in the cards for Canada’s housing market in 2018 and 2019. Yet would-be buyers hoping for a meaningful break will likely be disappointed—we don’t expect aggregate prices to fall on an annual basis either this year or next. We project aggregate prices in Canada to rise a modest 1.8% in 2018 with a slower 0.2% gain in 2019. In fact, our views on prices haven’t really changed since our May forecast despite resale activity coming in weaker than we expected so far in 2018. The thing is that fewer homes are also being put up for sale, which keeps—and in our view, will continue to keep—the market in balance. Soft activity to date, however, prompted us to revise our resales forecast materially. We now project a steeper drop 11.5% to 456,700 units in 2018 instead of the 4.3% decline to 493,900 units we projected in May. Ontario and British Columbia will account for most of this drop. We now believe that the new stress test on uninsured mortgages will have larger, longer-lasting dampening effect on resales than we previously assumed. Nonetheless, the effect will taper off over time with the market’s still-positive fundamentals—an economy running at capacity, low unemployment rates, rising incomes and rapid population growth—providing scope for a slight 1.6% increase in resales in 2019. Still, stiff interest rate headwinds will leave the level of activity that year below the 10-year average.


Link to the full report
To view, print and download the new report, click on the following link:
http://www.rbc.com/economics/economic-reports/pdf/canadian-housing/housingforecastAugust2018.pdf
 
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