Canada’s biggest bank is updating its forecast for the country’s housing market through 2017 as a result of a strong first quarter of sales and price gains.

In January, RBC had predicted that national home resales would drop 0.6% this year and 6.4% in 2017.

For British Columbia, the bank expected existing home sales to plummet 10.1% next year, following a 3.7% increase this year. In Ontario, RBC said transactions would be down 0.7% this year, and then crumble by 7.6% the following year.

“We’re probably going to bump up those numbers given the strength year to date,” said Robert Hogue, senior economist for RBC’s economics research department.

The Canadian market, driven by the Greater Toronto Area and Greater Vancouver has repeatedly defied bearish industry observers’ expectations, and in March sales were up 12.2% year over year and prices surged 15.7%.

“Year to date price increases have been much stronger than we’ve expected,” Hogue told BuzzBuzzHome News recently, noting the slowdown RBC previously called for won’t be as drastic as anticipated.

The January forecast saw composite resale prices in BC growing by 6.4% and 1.5% in 2016 and 2017, respectively. Meantime, Ontario gains were pegged at 4.5% this year and 1.3% the next.

However, while the updated forecast should appear rosier by comparison, the general narrative remains unchanged.

“Our story has long been a rise in interest rates will cool housing demand in Canada,” Hogue explains. “We have a first rate increase by the Bank of Canada in the second quarter of next year,” he says.

The economist explains RBC’s forecast is “more event driven than time driven.” However, Hogue admits “our expectations that interest rates would rise have been off,” adding, “We’re not the only ones where were off.”

“Just because that interest rate hike has been delayed, that story is still there,” says Hogue.

Strong Canadian Housing Market Performance Leads Canada’s Biggest Bank to Update Forecast by Josh Sherman | Buzz Buzz Home