After home sales failed to meet expectations in 2014, many analysts gave a cautious forecast of only a 2% increase in sales for 2015. However, despite several economic ups and downs, the real estate sector performed surprisingly well across Quebec this past year.
Key interest rate, depreciation of the loonie and jobs
To everyone’s surprise, at the start of the year, the Bank of Canada decided to reduce its key interest rate to 0.75%, which led to lower mortgage interest rates. The impact of this change resulted in shorter terms and generous rate discounts. What’s more, in July 2015, the Bank of Canada further reduced its key interest rate to 0.50%. While this second decrease had a less dramatic effect on mortgage rates than the first, it did encourage Canadian banks to reduce their preferred rates, which gave a boost to the Canadian economy.
Among other factors influencing the housing market, the job market proved to be particularly resistant to economic fluctuations, with over 80,000 jobs being created in Canada over the course of the year.
Higher sales than expected with slight price increases
While many anticipated growth in home sales of just 2% in 2015, as mentioned above, by mid-2015, that figure had already reached 5%. The Québec Federation of Real Estate Boards (QFREB) even forecast a rate of 6% or 7% by the end of the year, with some 75,000 properties sold, and the Canadian Mortgage and Housing Corporation (CMHC) agreed.
Although home prices were widely expected to stagnate, they saw a slight increase of 1% in 2015, according to the QFREB. As a result, the CMHC predicted that the average price recorded by Centris® would range from $260,000 to $280,000 for 2015.
What’s in store for 2016?
According to the CMHC, 2016 should be very similar to 2015, as the Canadian and Quebec economy should pick up, resulting in higher a GDP. With this positive economic forecast and an anticipated rise in immigration, the CMHC believes that housing demand will increase. It forecasts 12,000 to 14,000 single-detached home starts and 24,800 to 28,900 multiple unit starts. In addition, between 68,000 and 76,000 properties are expected to be sold and the average Centris® price should increase from $262,000 to $295,000.
In short, in spite of the economy’s fits and starts and having to contend with a buyers’ market, sellers should still fare well in 2016.
If you have questions or would like to learn more about good strategies applicable to you, feel free to contact or make an appointment with your office’s mortgage development manager who will be pleased to help you.
Information was taken from the QFREB and CMHC websites.
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