Property sales in Canada are forecast to fall by 3% this year while the national average price is forecast to rise by 4.8% to $513,500 in 2017 but there will be significant regional variations.

According to the latest forecast from the Canadian Real Estate Association (CREA) British Columbia is forecast to see the largest decline in sales with a fall of 17.5%, followed by Prince Edward Island with a decrease of 10.8%. The report points out that activity in both provinces is retreating from all-time highs reached last year.

Newfoundland and Labrador is also forecast to see a decline in sales of 8.4%, continuing a softening trend that stretches back nearly a decade while Alberta is forecast to have the largest increase in activity with a rise of 5% but this will still be nearly 10% below the 10 year average.

Elsewhere, sales activity is forecast to be little changed from 2016 to 2017. Ontario sales are forecast to rise by less than 1% in 2017 as strong demand runs up against an increasingly acute supply shortage.

The average price is expected to fall by more than 5% in British Columbia as well as Newfoundland and Labrador, by 2.8% in Saskatchewan while rising by more than 15% in Ontario.

In other provinces where average price last year began showing tentative signs of improving, average price gains are forecast to hold below the rate of inflation in 2017 as the impact of recent regulatory changes and higher expected mortgage rates lean against stronger demand and tighter market conditions.

In provinces where economic and housing market prospects are closely tied to the outlook for oil and other natural resource industries, average prices are showing tentative signs of stabilizing in Alberta while softening in Saskatchewan and Newfoundland and Labrador.

While prices are still rising rapidly in Ontario, British Columbia has seen a compositional shift in the average price that reflects softer sales activity in the Lower Mainland which has some of the most expensive real estate in Canada.

Average prices in other provinces are either rising modestly or holding steady, reflecting well balanced supply and demand.

Looking further ahead national sales are forecast to fall by 1% in 2018 and most of the annual decline is expected result from fewer sales in Ontario, while the national average price is forecast to rise by 5% to $539,400 in 2018.

This is expected to reflect ongoing market tightness in Ontario and a further return to more normal levels in British Columbia. Price gains outside of the Greater Golden Horseshoe are not expected to approach the increase in the national average price.

Saskatchewan and Newfoundland and Labrador are projected to see average prices decline in 2018 by less than 1%. In most other parts of Canada, home price increases are forecast to more or less track overall consumer price inflation in 2018.

The CREA report also points out that recently tightened mortgage rules, higher mortgage default insurance premiums and an expected rise in mortgage interest rates all represent headwinds to affordability in all Canadian housing markets but it will be some time before their full impact on housing markets is evident.

In some regions, CREA suggests that the recently tightened stress test for mortgage financing qualification will force some first time buyers to re-think how much home they can afford and may lead to a drop in home purchases as they shop for a lower priced home.

In regions where there is a shortage of lower-priced inventory, some sales may be delayed as buyers save longer for a larger down payment and in markets like Vancouver and Toronto, where single family homes are in short supply and there are few affordable options, some buyers may find themselves priced out of the market entirely.

In Toronto, the stress test for mortgage qualification may prompt some buyers to move further out into communities located in the Greater Golden Horseshoe where homes are more affordably priced.

Property Prices & Sales Set to Rise in Canada This Year, But with Regional Differences by Property Wire