Continued market growth expected in 2006
After posting record growth in both price appreciation and sales in 2005, Canada’s housing market is expected to enjoy solid but more moderate growth in 2006. Real estate experts and economists are predicting that more balanced conditions should emerge in the year ahead and 2006 will be characterized by healthy inventory levels and less urgency in the marketplace. Nationally, home sales in most markets are expected to either exceed or remain on par with record 2005 levels. The highest percentage increases in sales are expected to be in Western Canadian markets. Projected home prices range from a low of zero in London – St. Thomas (Ontario) to a high of 10% in some heated Western Canada markets. The majority of Canadian markets, however, should see modest price appreciation ranging from 2 to 5 percent.
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2005 in review
Nationally
Sales volumes and price increases once again broke records across Canada. Despite growing inventory levels, strong economic conditions fuelled more growth in house prices in the third quarter of the year, regaining momentum after easing in the second quarter. Most of the major price gains were in Western Canada resulting from higher rates of in-migration as well as job and wage growth. Sales activity remained strong across the country in the usually slower summer months with record levels of sales occurring in August. The momentum of 2005 is expected to sustain growth through the first half of 2006.
Greater Vancouver Market
2005 was the biggest year on record for the Greater Vancouver residential housing market. Sales reached 40,530 for the year surpassing 2003’s next highest total by 7.2% and the Real Estate Board of Greater Vancouver recorded the largest dollar volume of sales ever in Board history. December sales were up 12.4% in comparison to last December indicating that the holiday season and end of year activities did not deter buyers. Fuelled by a healthy economy, international and inter-provincial migration and employment, the market flourished. At year-end, the Housing Price Index continued to show substantial benchmark price increases over December 2004.
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Benchmark Price Dec. 2005 |
% Change 1 Year - Dec. 2004 |
| Detached |
$567,417 |
18.5% |
| Townhome |
$351,970 |
13.7% |
| Apartment |
$282,079 |
19.7% |
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What’s ahead in 2006
Nationally
- Anticipated interest rate increases are expected to be modest and will have a minor to moderate effect on the real estate market.
- Momentum in the housing market has shifted from Central Canada to the West. Housing markets in BC, Alberta and Saskatchewan are expected to show growth well above the national average.
- Immigration will play a larger role in housing markets as 255,000 new immigrants are expected in Canada in 2006.
- Adult communities are growing in popularity with empty nesters and retirees.
- Strong, economic fundamentals will contribute to healthy residential real estate.
- Vancouver, Victoria and Toronto will be the three most expensive cities in which to buy real estate.
Greater Vancouver Market
The housing market is expected to remain healthy going into 2006. Greater Vancouver will see increased redevelopment of existing buildings as bare land becomes scarce. Construction will be a major force in the economy with 2010 Olympic projects, the RAV line, Vancouver Port and Vancouver Airport expansions, a Sea-to-Sky Highway upgrade, a planned Coquitlam light rail service and more. Strong employment and income gains combined with still relatively low interest rates should continue to bolster consumer confidence and demand for homes. This strong demand coupled with low inventories is expected to continue to push prices up
but at a more moderate pace than in the last few years.
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Sources: Real Estate Board of Greater Vancouver, Realty Times, Canada NewsWire