By Mario Toneguzzi, Calgary Herald
CALGARY – Alberta home sales are poised to show the biggest year-over-year gains in Canada over the next two years, according to the Canadian Real Estate Association. In a report Monday, CREA said MLS sales in the province would grow by 6.8 per cent this year to 57,400 and by another 1.7 per cent in 2013 to 58,400. Across the country, CREA forecasts 0.3 per cent growth this year followed by a decline of 0.3 per cent in 2013. Gregory Klump, CREA’s chief economist, said risks to the Canadian economic outlook remain elevated because of the European debt troubles although continued low interest rates provide a “silver lining.” “So long as the European debt crisis is contained and a global economic recession avoided, low interest rates will support Canadian home sales and prices,” he said. “Recent trends are reassuring, but interest rates remaining low for longer will doubtless keep the Canadian housing market under scrutiny for signs of overheating.”
The average sale price in Alberta is forecast to grow by 1.4 per cent in each of the next two years to $358,300 in 2012 and to $363,200 in 2013. Nationally, the average sale price is forecast to decline by 1.1 per cent this year to $359,100 but increase by 0.9 per cent in 2013 to $362,300. Lai Sing Louie, regional economist for the Prairies and Territories for Canada Mortgage and Housing Corp., said residential MLS sales in Alberta rose seven per cent in 2011, while new listings decreased by four per cent.
According to the CMHC, MLS sales in Alberta are expected to grow by 2.8 per cent in 2012 followed by 3.5 per cent growth in 2013. Average sale prices are expected to rise by 2.2 per cent in 2012 with more growth of 2.4 per cent in 2013. “Alberta’s bright economic and demographic outlook will result in growing demand for resale homes,” Louie said. The possibility of a housing correction and the dangers of record consumer debt came up at a meeting Monday between Finance Minister Jim Flaherty and 13 private-sector economists for his traditional pre-budget consultation. Flaherty and a handful of the economists said they continue to be concerned about household debt in Canada and a somewhat overheated housing market – especially condominiums.
Some of the big banks are suggesting Ottawa also consider implementing “measured actions” for the housing market, such as reducing the maximum amortization period for mortgages back to 25 years, and consider increasing the minimum down payment, possibly to 10 per cent. “There has been some moderation in the housing market. I remain concerned about the condo market, quite frankly,” Flaherty told reporters after his one-hour meeting in Ottawa.
“I again encourage Canadians to be careful in the amount of debt they take on in terms of residential mortgages because (interest) rates will go up some day.” On the housing market, Flaherty noted there’s “a divergence of views” among the economists, as some expressed more concern than others.
Avery Shenfeld, chief economist with CIBC World Markets, echoed some of Flaherty’s worries and said that while there are signs the housing market is cooling, there’s still some cause for concern. “There’s a general feeling that more than just the condo market, the Canadian housing market, is starting to get a little bit overdone in terms of price momentum,” Shenfeld said.