It's still growth, but a tad slower

The Canadian Real Estate Association cut its 2010 forecast for resale house prices and sales Wednesday, saying sales in British Columbia were not as strong as expected at the start of the year.

The industry group said it now expects the average price to climb 1.6% to $325,400 nationally in 2010, a big drop from its previous forecast of a 5.4% gain.

Sales are seen rising 5.5% to 490,600 units in 2010. In February, CREA forecast sales of 527,300 units in 2010, up 13.3% from 2009.

The group said a decline in affordability in British Columbia hurt sales in the province during the first quarter, although sales in Ontario were much as expected.

“Lower expected activity in British Columbia accounts for more than half of the downward revision in national sales activity,” the group said.

CREA said it now expects sales in B.C. to fall 5.9% this year to 80,000 units from 85,028 in 2009, while prices there are seen up 2.3% at $476,400.

It expects Ontario sales to rise 10% to 215,400 units, a record but a smaller gain than previously thought. Prices are seen to increase 3.9% to $330,900.

The association had expected to see stronger sales in the first half of the year, ahead of the introduction of new mortgage rules, rising interest rates and new sales tax regimes in Ontario and British Columbia.

Month-to-month home resales have been cooling from the beginning of the year, while listings have been rising, quieting a feisty debate that a bubble was forming.

The real estate association repeated Wednesday it did not see a U.S.-style housing price correction, mostly because of solid mortgage market trends.

The Bank of Canada raised interest rates for the first time in three years this week, bringing its benchmark overnight rate up a quarter point to 0.5%.

For 2011, CREA forecasts an 8.5% slide in sales to 448,700 units, with every province except Newfoundland and Labrador to post declines from this year. An earlier forecast pegged the slide at 7.1%.

The average national price is seen slipping 2.2% to $318,300, compared with an earlier view of a 1.5% decline.

(Source: Reuters/National Post)