Wednesday, December 10, 2014
Byline: Susan Pigg
Toronto house prices are expected to climb a further 4 per cent in 2015, outstripping the Canadian average of 2.5 per cent, according to the annual Housing Market Outlook report by national real-estate brokerage ReMax.
But rising interest rates, rather than slumping oil prices, remain the greatest unknown for the Canadian market next year, says Gurinder Sandhu, executive vice-president of ReMax.
Rates had been widely expected to start climbing from their historic lows next fall, or even next summer. But some economists are predicting the fallout from falling oil prices could delay such a move.
Either way, any increase is likely to be slow and steady enough that, at least for a time, it could actually spur a rush of purchases in 2015 by house hunters anxious to lock in mortgages pre-approved at lower rates, says Sandhu.
That could help create more balanced markets across much of Canada, where the number of listings in many markets actually exceeds demand, keeping prices largely in check.
Toronto is another matter, according to the report, which notes that the number of freehold houses - as opposed to condos - available for sale continues to be at historic lows and isn't likely to improve during 2015, driving more bidding wars and higher-than-average price gains.
GTA home prices are up more than 8 per cent this year over 2013 and, by the end of 2015, could average $589,100, ReMax predicts, up from about $566,400 this year.
Optics could provide another boost for the Toronto market in 2015.
"The recent municipal election has brought a feeling of stability to the city, which generally proves well for local real estate," says the report. Even the 2015 Pan Am Games could unleash pent-up demand and a flurry of sales activity in the latter part of next year, further pushing up prices, it notes.
That could also steer even more first-time buyers to condos, or houses in the 905 regions - the latter a trend that is showing signs of picking up again, says Sandhu.
The 38-page annual look-ahead at some 32 Canadian housing markets - based on sales and interviews with realtors from Victoria to St. John's - was written before this week's stock market reaction to slumping oil prices.
Housing watchers are now keeping an especially close eye on Calgary, which was one of the "hot three" through 2014, along with Toronto and Vancouver, in terms of strong house sales and price gains.
ReMax predicts that the average Calgary sale price will hit $483,000 by the end of this year, up almost 6 per cent from 2013, largely because of "good employment in the energy sector driving migration to the city."
Sandhu believes it will take a "sustained and prolonged" depression in oil prices to have a major impact on Calgary's housing market, and that's unlikely to be felt in 2015, when it predicts home prices will climb to almost $500,000.
"The price of oil has come down radically over the past few months and we haven't seen an impact on the real-estate market, even in Calgary," he says.
The unlikely duo of Kelowna, B.C., and Moncton, N.B., are expected to lead the way for house-price gains in 2015, with increases in those cities expected to average 7 per cent and 6 per cent, respectively, based on population growth, a shortage of listings and improving economies, notes the report.
Greater Vancouver and Victoria are expected to average gains of about 4 per cent, which could see average sale prices climb to $863,600 and $513,600, respectively, by the end of 2015, says the report.
Hamilton-Burlington, which has seen prices surge thanks to GTA real-estate refugees looking for more affordable housing within driving distance of Toronto, are expected to see reasonable gains of 2.7 per cent, about half the 6 per cent seen from 2013 to the end of this year.
Canada's housing market remains buoyed by low interest rates - even if they rise slightly, they will remain among the lowest in history - steady economic growth and immigration.
The influx of immigrants, many of whom are now buying properties quite quickly after arriving, realtors say, will help the population - and potential home-buying pool - increase by another 250,000 to 280,000 buyers next year, says Sandhu.
By the end of 2015, the average price of a home in Canada is expected to hit $416,300, up from about $406,000 in 2014, ReMax predicts.