Canadian real estate markets demonstrated remarkable resilience in 2012 – with home sales up or on par in 65% of major centres – despite considerable headwinds in terms of tighter financing and economic uncertainty abroad. The trend is expected to continue, with home-buying activity propped-up by low interest rates and an improved economic picture in 2013, according to a report released today by RE/MAX.
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The RE/MAX Housing Market Outlook 2013 examined trends and developments in 26 major markets across the country. The report found that the number of homes sold is expected to match or exceed 2011 levels in 65% of markets (17/26) in 2012, led by strong activity in Western Canada, including Calgary (up 13.5%) and Regina (8%).
Eighty-one percent (21/26) of markets are set to experience average price increases by year-end 2012, with Regina the country’s frontrunner at 8%, followed by Hamilton-Burlington, Greater Toronto, and Fredericton at 7% and Saskatoon at 6.5%. The forecast for 2013 shows the upward trend moderating, but values still ahead of 2012 levels in 85% (22/26) of centres. Stability is forecast to characterize Canadian real estate in the new year, with sales above or on par with 2012 levels in 81% (21/26) of markets.
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Nationally, an estimated 454,000 homes will change hands in 2012, falling 1% short of the 2011 level of 456,749. Canadian home sales are expected to almost mirror the 2012 performance next year, holding steady at 454,000 units. The average price of a Canadian home is expected to remain stable at $364,000 in 2012 – on par with the figure reported in 2011. Values are expected to appreciate nominally in 2013, rising to $366,500, 1% above year-end 2012 levels.
The report found that low interest rates were a major impetus in 2012, fuelling sales of homes across the board. Tight inventory levels also factored into the equation early in the year, causing a flurry of activity in many centres. By mid-year, however, the third round of CMHC mortgage tightening had a noticeable impact on housing markets, pushing homeownership beyond the grasp of many first-time buyers.
While first-time buyers will continue to have a significant presence in the overall marketplace, they are expected to take a back seat in 2013 in Canada’s largest markets – with move-up buyers the new engine driving home-buying activity. The greatest advance in home sales is expected in Vancouver (12%), Calgary (10%), Halifax (5%), Kingston (4.5%) and Saint John (4%). The strongest upward momentum in average price in 2013 is forecast for St. John’s (6%), Regina (5%), Kingston (4.5%), and Halifax (4%), followed by Fredericton and Winnipeg at 3%. More balanced market conditions are expected in 2013 throughout the majority of markets, with supply meeting demand.
Immigration and population growth will continue to support housing demand moving forward. The Canadian government’s commitment to immigration will hold steady, with the country set to welcome as many as 265,000 immigrants in 2013. The greater focus on economic immigrants is already leading to quicker household formation and homeownership than in years past. These two factors will also support the burgeoning condominium segment – along with Canada’s aging population – while the desire for tangible assets props up the upper-end.