Housing sales in Canada is expected to be much better than what have been speculated before. This is because of the increasing consumer confidence that will partially offset the awaited deferment of interest rate hikes, this is how the Canadian Real Estate Association sees it.
CREA had earlier predicted that the national average home price in 2011 would fall by 1.3 per cent from last year to $326,000. This is contrary to what they have recently released that there will be 439,900 existing homes sold in 2011, down 1.6 per cent from 2010, but better than the nine per cent decline that CREA had forecast at the end of last year. Recent reports on building permits and housing starts are two indicators why the change in forecast has been made.
Canada Mortgage and Housing Corp. reported Tuesday that the pace of new-home construction in Canada increased slightly last month, rising to 170,400 units, up from 169,000 in December on a seasonally adjusted annual rate. That puts the country on a pace for about 10 per cent fewer housing starts than last year.
A moderation in housing starts is a sign that supply is contracting in line with reduced demand, which could avoid an unhealthy glut of available houses on the market if demand declines when interest rate hikes are announced.
CREA predicted Tuesday that some sales that would have been made later in the year will likely occur in the first quarter, as a result of the new rules. A previous change in mortgage rules last year contributed to extremely strong first-quarter demand as buyers sought to beat the deadline.
“This is expected to produce a milder version of the volatility in sales activity that we saw last year which resulted from additional transitory factors,” said CREA’s chief economist Gregory Klump.
Last year, sales were also pushed ahead to the first part of the year as buyers in two provinces — British Columbia and Ontario — rushed to avoid a switch to the harmonized sales tax on July 1.
Read more: http://www.cbc.ca/money/story/2011/02/08/crea-forecast-2011.html#ixzz1Djy9l7Fy
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