Home sales nationwide are expected to drop to their lowest level in three years in 2018, driven largely by the decline in Ontario, according to the Canadian Real Estate Association (CREA).
The association said it expects 495,100 homes to be sold next year after downgrading its sales forecast for 2017 due to a 9.9 per cent drop in August compared to sales in 2016.
“As is the case this year, most of the annual decline in sales next year reflects an expected decline in Ontario sales, with activity anticipated to remain well below the record-levels logged in early 2017,” CREA said in its quarterly forecast.
The association expects sales to decline by 2.3 per cent in 2018, following a 5.3 per cent decline this year to 506,000, or 20,000 fewer than previously forecast in June.
Seasonally adjusted sales in August rose 1.3 per cent from the previous month, due to a 14.3 per cent boost in sales in the Greater Toronto Area. Sales in the GTA were down 35 per cent from a year ago.
Policy Changes to Keep Market Cooler
Benjamin Reitzes, senior economist and director of BMO Capital Markets, said the August data suggests the worst may have passed for the GTA, following the rollout of provincial policy changes designed to restrict foreign buyers.
“The Bank of Canada’s rate hikes should help contain any renewed exuberance, but if things do heat up again, expect policy-makers to step in before too long,” Reitzes said in a report.
Sales Down Across Canada
CREA projects sales in British Columbia and Ontario to drop by about 10 per cent in 2017, compared to record highs set in 2016.
The association said sales in August were down in almost two-thirds of all local markets, led by the Greater Toronto Area and nearby housing markets.
In contrast, August sales were up 7.3 per cent from July in Vancouver, and 21.3 per cent higher compared to a year ago.
“Experience shows that homebuyers watch mortgage rates carefully and that recent interest rate increases will prompt some to make an offer before rates move higher, while moving others to the sidelines,” said Andrew Peck, president of CREA.
