So much for steadying the course. According to the Canadian Real Estate Association, Canadian home sales are expected to drop to a nine-year low in 2019.
Rising interest rates and strict mortgage stress-test rules are projected to be the cause of the decline.
Though a decline is expected, CREA says it won’t be drastic. Provided little changes policy-wise in 2019, sales are expected to drop by a mere 0.5 per cent or 456,200 units.
“In 2019, home sales activity and prices are expected to be held in check by recent policy changes from different levels of government, in addition to additional interest rate increases,” CREA announced in their forecast.
With just over a week left before 2019, CREA revised its end of year projections saying national home sales will decline 11.2 per cent to 458,200 units in 2018.
B.C. and Ontario make up the majority of the decline in 2018. However, sales in Alberta, Saskatchewan, Manitoba and Newfoundland and Labrador are also expected to fall to multi-year lows.
Home price predictions have also been adjusted with the national average moving down to 4.2 per cent to $488,600.
In Toronto, the year-over-year decline was so strong, it brought down Ontario’s average home price by 2.6 per cent.
In 2019, home prices are expected to rise across the country. CREA estimates a 1.7 per cent increase, bringing the national average price for a home to $496,800 in 2019.
“As we look to 2019, the major battle lines seem fairly clearly drawn, with the market still supported by strong population growth on the one side, and challenging affordability (past price gains and rate rises) on the other,” Doug Porter, chief economist at BMO Economics said in a statement. “While we expect sales activity to stabilize next year… we nevertheless anticipate that prices will slow even further to gains likely below that of inflation.”