After a tough year in 2015, Alberta’s resale housing market is expected to rebound in 2016, according to a report by RBC Economics.
The bank’s senior economist, Robert Hogue, is forecasting sales in the province to dip by 17.8 per cent this year from 2014 to 59,000 transactions — the largest drop in the country.
But Alberta is then expected to see the biggest year-over-year hike in sales in 2016 of 7.1 per cent to 63,200 units.
Despite the drop in sales this year due to a slumping economy and continued depressed oil prices, the average sale price in Alberta is forecast to climb by 0.7 per cent to $378,500 and grow by another 2.1 per cent next year to $386,600.
Hogue said the 2016 sales forecast is elevated because it is compared to the steep decline overall in 2015.
“I wouldn’t necessarily call it a turnaround. It’s just that the depth of the correction in the early part of 2015 was so deep . . . We’ve seen home sales pick up slightly since the winter and we think that going forward it’s going to be about stable or might increase a bit,” he said.
The forecast is based on RBC assumptions for the price of West Texas Intermediate crude oil at $52 US a barrel this year and $72 in 2016. In recent days, that price has ranged between $40-$41.
Hogue said the market has rebalanced in Alberta with sales picking up and new listings easing off from their levels earlier this year.
New home construction is going to feel the economic pinch in the next two years. Hogue is calling for an annual decline in Alberta of 12 per cent in 2015 to 35,700 units followed by another 15.1 per cent decrease in 2016 to 30,300 units.
At the national level, the RBC report said the number of resales in the country would jump by five per cent this year to 505,400 but drop by 0.7 per cent next year to 501,800.
Hogue is expecting the national average price to rise by 4.6 per cent this year to $392,600 and by 3.2 per cent in 2016 to $405,100.
As for housing starts, Canada will mirror what is happening in Alberta but at a lesser scale. Starts this year are expected to drop by 1.9 per cent year-over-year to 185,800 units and fall by another 2.1 per cent next year to 181,500 units.
According to the Canadian Real Estate Association, year-to-date until the end of July, MLS sales in Alberta are down by 20.5 per cent from the same period a year ago to 35,986 and the average sale price has dipped by 0.9 per cent to $397,412. New listings of 71,358 are down 3.3 per cent.
In Canada, MLS sales have risen by 5.9 per cent to 314,736 units and the average sale price has increased by 8.5 per cent to $441,945.