And gives a sobering prediction for how sales will fare.
expects home resales to fall by 11.5% next year, with Vancouver’s market taking the most significant hit.
“After generating much of the heat at the national level in the past two years, we expect the BC market—and more specifically, the Vancouver-area market—will be a major source of cooling for activity nationwide in 2017,” RBC said in its 2017 Housing Forecast. “We project home resales to fall by 11.5% next year in Canada with almost half of this decline occurring in British Columbia.”
BC is expected to see its sales decline by 24%, PEI by 21%, Newfoundland by 14%, Ontario and Saskatchewan by 11% respectively, New Brunswick by 6%, Alberta and Nova Scotia
by 5%, Quebec by 4%, and New Brunswick by 3%.
The bank is, unsurprisingly, chalking the forecasted drops up to the result of the recently announced mortgage rule changes.
And they’re expected to impact prices as well.
“In turn, we expect that weakening resale activity will erode sellers’ pricing power; yet, for the national and majority of provincial (and local) markets we do not project prices to fall outright (on an annual basis) because we expect demand-supply conditions to remain balanced next year,” RBC said. “Rather, our base case for 2017 shows benchmark prices continuing to rise at much slower rates. For Canada, we forecast the benchmark price to increase by only 1.6% in 2017 (compared to 9.5% in 2016).”
RBC is predicting Ontario will have its softest 12 months for average home price growth in eight years, projecting an increase of 3% year-over-year.
“However, it is expected to fare better than some other markets. On the other hand, we expect three provincial markets—Alberta, Saskatchewan, and Newfoundland and Labrador—will be characterized by demand-supply conditions tilted in favour of buyers, thereby leading benchmark prices to fall outright next year,” RBC said. “In the case of both Alberta, and Newfoundland and Labrador, this would be the second-straight annual price drop; and in the case of Saskatchewan, this would be the second decline in three years.”
To read the full forecast, click here