Despite an economic pummelling from faltering oil prices that’ll cool the city’s housing market, real estate analysts are predicting some modest growth in the sector.
While numbers in the city’s housing industry will fall from record-setting figures of 2014, prices should increase by 1.58% this year, the Calgary Real Estate Board (CREB) said Wednesday. But sales are predicted to fall by 4% in 2015 compared to an extraordinarily hot 2014, said CREB Chief Economist Ann-Marie Lurie, who added that modest price increase is more hold-the line than anything.
“In fact, that’s actually level to the end of last year,” she said. There’s no denying the role of tumble in the price of oil that’s dropped by more than 50% since last June, said Lurie. “The housing risks lie mainly with employment levels and net migration, both of which can be more severely impacted by a prolonged period of weakness in the energy sector,” said Lurie, adding if energy prices falter longer, housing forecasts could change. “Those estimates on employment might reverse, it could hit harder.”
Last year, total housing starts were up in Calgary by 36.7% over 2013, said the Canada Mortgage and Housing Corp. (CMHC). But the agency has predicted a 16.7% decrease in that activity this year. Lurie said the market shouldn’t be impacted as badly as it was in the last recession because the broader economic fundamentals are more sound now.
“It’s not the losses we saw in 2009,” she said. Meanwhile, Royal LePage also said falling oil prices will substantially cool a red hot housing market that should still see gains in 2015. Housing prices should increase by 2.4% this year, due largely to a limited supply facing buyers, said broker Ted Zaharko, owner of Royal LePage Foothills.
“While we expect price rises may moderate in 2015, the upward trend we’ve seen over the past few years is unlikely to reverse without a meaningful increase in inventory,” said Zaharko.
He called the impact of tumbling oil prices “worrying” that should have some immediate effect, but said their ultimate impact might not be dramatic. “There would need to be prolonged low oil prices for any spillover into the housing market to be significant,” said Zaharko.
Some economic analysts are predicting a lengthy swoon for oil prices that could lead to a prolonged economic downturn, particularly in Alberta and the West. On Tuesday, the Conference Board of Canada predicted Alberta will fall into recession this year. But Premier Jim Prentice said that while the province is taking a major hit, its economy shouldn’t suffer to that extent.
Original article by Bill Kaufmann, Calgary Sun
on Twitter: @SUNBillKaufmann
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