Canada’s near-term housing outlook remains strong; likely to moderate in 2017

Canada’s near-term housing outlook remains upbeat. In the first quarter, the Canadian residential activity accelerated noticeably and registered its most rapid pace since 2012. Growth was broad-based. Both resale and construction activity grew robustly. The growth momentum has not given any sign of slowing down in the second quarter.

However, there continues to be a story of three markets, said TD Economics in a research report. Toronto and Vancouver regions continue to be the leaders in price gains, whereas Alberta and other commodity manufacturing regions are seeing declines in activity and prices. The rest of the markets are somewhere in between little or no price growth.

There is little debate that the hottest housing markets in Canada are ready for a correction. However, it is difficult to project the timing.

“Over the second half of 2016, some moderation in resale activity and price growth should become evident as bond yields pull off their lows and stretched affordability leads to a cooling in domestic and foreign housing demand,” noted TD Economics.

Barring considerable new government regulatory measures to curtail housing market speculation in 2016, specific signs of slowing housing market are not expected to be seen until 2017.