Home Sales
Rising interest rates have cooled housing transactions for this year. But, looking at sales in Alberta for the first quarter of 2006 shows sales activity at its highest level on record. Alberta is expected to post the greatest annual increase in transactions this year for all of Canada, reflecting Alberta’s upbeat economic, employment and population growth prospects which result from rising investment in the energy sector.
According to the Canadian Real Estate Association (CREA)’s chief economist, Gregory Klump, further increases in home prices and interest rates could cause resale activity to ease in 2007, but overall housing demand will remain strong to support further price increases.
The average household income is rising, supporting overall housing affordability. Tax cuts are putting money back into the pockets of Canadians and consumer confidence about making major purchases is strong.
Costs associated with buying, selling and owning a home are reduced thanks to the reduction of the GST to 6% and the one percent reduction on the federal portion of the HST. GST is charged on professional services used in a housing transaction such as fees paid to lawyers, home inspectors and realtors. GST is also charged on the goods and services purchased when moving from one home to another (such as moving and storage services, renovations, furniture and major appliances).
The CREA residential average price forecast for Ontario:
year average
price forecast annual change
%
2005 $263,041 7.3
2006 $278,560 5.9
2007 $291,096 4.5
Compare these figures to the forecast for Alberta!
year average
price forecast annual
change%
2005 $218,266 12.1
2006 $249,915 14.5
2007 $283,653 13.5
Housing Starts
A similar forecast is provided by CMHC’s Chief Economist, Bob Dugan. Housing starts did move higher in June, but overall housing starts for the second quarter of 2006 were more than 9% below the first quarter level. CMHC expects the level of activity in housing starts to moderate in the second half of 2006 as rising prices and slightly higher mortgage rates result in a softening of demand for existing and new homes.
Urban housing starts increases in June compared to May were strongest in British Columbia at 14.8%. The Atlantic region followed at 12.3%. Comparatively, Ontario starts were up by only 2.8 %.
Tammy Dufault
Century 21 BJ Roth Realty Ltd.
