Property sales and price forecasts for 2013 and 2014 in Canada

National residential property sales in Canada have improved more quickly than anticipated and as a result the Canadian Real Estate Association has updated its forecasts for 2013.

Sales are forecast to reach 449,900 units in 2013 and the national average home price is projected to rise by 3.6% to $376,300 in 2013.

The sales forecast represents a fall of 1% from last year and marks the sixth consecutive year for which activity will have held to within short reach of 450,000 units. CREA’s previous forecast for national sales in 2014 remains little changed.

The upward revision to activity in British Columbia accounts for nearly half of the small upward revision to national activity this year. The forecast for sales across the Prairies has also been raised. British Columbia and Alberta are the only provinces where CREA annual sales are forecast to rise above levels last year.

In 2014, national activity is forecast to reach to 465,600 units, a rebound of 3.5% and in line with its 10 year average. CREA said that the forecast increase reflects a gradual strengthening of sales activity alongside further economic, job, and income growth combined with only slightly higher mortgage interest rates.

British Columbia is still forecast to post the strongest sales increase in 2014 with an increase of 6.7% compared to a weak result in 2013. Most other provinces are forecast to post gains in the range between 2% and 4%.

Average prices have also remained firmer than expected due to a rise in the share of national sales among larger and pricier markets compared to last year.

The national average home price is projected to rise by 3.6% to $376,300 in 2013, with gains strongest and in the range between 4% and 5% in Prairie provinces and around 6% in Newfoundland and Labrador. Average price growth in British Columbia and Ontario is expected to come in just under the national increase, advance by less than 1% in Quebec and New Brunswick, and recede by less than 1% cent in Nova Scotia.

‘The environment for home prices in Quebec, New Brunswick, and Nova Scotia will likely be shaped by ample inventory levels relative to sales,’ said Gregory Klump, CREA’s chief economist.

‘The balance between the two indicates that buyers have an abundance of listings from which to choose in those provinces, which could keep pricing prospects in check until sales draw down inventories,’ he added.

The national average price is forecast to edge up a further 1.7% in 2014 to $382,800. Alberta is forecast to see the biggest average price increase in 2014 of 3.4%, with gains in Saskatchewan, Manitoba, and Newfoundland and Labrador running just ahead of overall consumer price inflation. Average prices in Quebec and New Brunswick are expected to remain stable in 2014, with other provinces eking out gains ranging from 0.5% to 1.5%.