CREA cuts sales forecasts
December 31, 2017
The Canadian Real Estate Association (CREA) has cut its home sales forecast for 2018 due to the impact of tighter mortgage regulations that come into effect New Year’s Day and are expected to rein in spending for some buyers.
CREA said in an updated projection in December that the banking regulator’s revised mortgage underwriting guidelines, which include a stress test for uninsured mortgages, will reduce sales activity across the country, particularly in and around Toronto and Vancouver.
The association now forecasts a 5.3 per cent drop in national sales to 486,600 units next year. That new estimate shaves about 8,500 sales from its previous 2018 forecast.
“With some homebuyers likely advancing their purchase decision before the new rules come into effect next year, the ‘pull-forward’ of these sales may come at the expense of sales in the first half of 2018,” CREA said in a statement.
“Meanwhile, other potential homebuyers are anticipated to stay on the sidelines as they save up a larger down payment before purchasing and contributing to a modest improvement in sales activity in the second half of 2018.”
However, the association is expecting the national average price of a home to rise in 2017 to $510,400, up 4.2 per cent from 2016.