The Bank of Canada issued its first monetary policy report this week, and it contained several details about the future of the housing market.
“Major Canadian housing market indicators remain strong: yearly growth in house prices is robust, sales of existing homes are above their historical average and the recent pace of housing starts exceeds demographic demand,” the Bank of Canada said in its Monetary Policy Report. “Strength in national indicators is being driven primarily by elevated activity in two markets—Greater Toronto and Vancouver.
“Over the projection horizon, regional divergences in housing activity are expected to gradually fade and the contribution to real GDP growth from residential investment will decline.”
Of course, all real estate is regional. And while the overall market is considered strong the by the central bank, not all individual markets enjoy the same outlook.
The bank provided data on just how much sagging oil prices are impacted oil-dependent regions.
The data, collected since November 2014, reveals the average resale price in energy-producing provinces fell by 4% (compared to an increase of 13.4% for the rest of Canada).
Starts fell by 32.8% in energy producing territories compared to -3%.
Housing resales, meanwhile, fell by 32.8% in those dependent regions compared to a decline of 3% for non-dependent markets.
Overall, however, low interest rates are expected to continue to encourage strong sales, according ot the bank.
“Low interest rates and higher house prices have led to strong growth in mortgage credit, recently pushing up the year-over-year growth of overall household credit to 5%,” the bank said. “Looking ahead, despite recent increases, mortgage and consumer borrowing rates are still low and are expected to continue to support mortgage and consumer credit growth.
“Consequently, the overall ratio of debt to disposable income will likely edge higher in the near term.”