Alberta expected to outperform national housing markets – Tight supply conditions to lift prices

Alberta will likely outperform national housing markets in 2014, says the new Global Real Estate Trends report released Friday by Scotiabank Economics.

“Relatively firmer employment and income gains and strong population growth are expected to underpin modestly higher home sales and steady new construction, while tighter supply conditions lift prices,” said the report authored by Adrienne Warren, the bank’s senior economist and real estate specialist.

The report said Canada’s housing market in 2013 outperformed expectations. The end-year tally for national home resales will be largely on par with 2012 and in line with the average pace of the past decade, it said.

National prices are on track for roughly a five per cent annual gain “with the average skewed higher by the strong sales rebound in several high-priced markets, including Vancouver and Calgary.”

According to the Calgary Real Estate Board, year-to-date up to Thursday, there have been 23,172 MLS sales in the city, up 10.92 per cent from the same period last year while the average sale price has risen by 6.54 per cent to $456,849.

The report said “a moderately lower level of resale transactions” is expected nationally in 2014. But steady job and income gains combined with strong population growth in the key first-time homebuyer demographic will continue to underpin housing demand.

“Overall market conditions are expected to remain fairly well balanced, with sellers responsive to underlying market conditions,” said Warren. “We expect national average home prices will be relatively flat next year. Downside price risk is greater in the more amply supplied high-rise segment than for single-family homes.

“The risks to the Canadian housing market appear fairly balanced. Cautious business hiring, muted wage growth, high household debt levels and affordability pressures could lead to a sharper slowdown in housing activity in 2014. At the same time, gradually improving global growth, still-attractive borrowing costs and population growth in key demographic segments are supportive of housing demand.”

 

© Copyright (c) The Calgary Herald

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