“Canada’s housing market is poised to post one of its best years on record in 2015 despite the Canadian economy being hit by a significant negative shock (plunge in oil prices) and a spike in condo completions in some markets,” said RBC economists Craig Wright, Dawn Desjardins, Paul Ferley and Nathan Janzen in the bank’s latest economic research note, published Tuesday. “Low interest rates and the resilient labour market continue to provide substantial stimulus for housing demand.”
RBC is forecasting a 5% increase in home sales on a national level this year, with 505,400 units expected to be sold.
Home prices, meanwhile, are forecasted to rise by 4.6%.
However, not all markets are expected to fare so well.
“Strong momentum is not equally shared across the country with home resale activity plummeting in oil industry sensitive markets (Alberta and Saskatchewan) and soaring in the non-energy intensive exporting provinces, Ontario and British Columbia,” the economists said.
And while 2015 is forecasted to show strong performance, the market is expected to soften next year.
“Our forecast assumes a slight easing in resale activity in 2016 as interest rates begin to increase with price gains slowing to 3.2% in that year,” the economists said. “In keeping with these forecasts we look for housing starts to slow marginally in 2015 and 2016 although remaining within our estimated range for current demographic requirements of 180,000 to 190,000 units.”
As for the Bank of Canada, RBC is reiterating its belief that the central bank will hold off on hiking rates until next year.
RBC is forecasting one of the best years on record for the housing industry, but that softening will occur in 2016.