Oil producing provinces will see home prices drop

Posted by on Wednesday, December 16th, 2015 at 9:28am.

The downtown in the price of oil is expected to impact the housing industry in other provinces besides Alberta. 

The Canadian Real Estate Association (CREA) released its 2016 predictions and believes the average price of a home in Saskatchewan and the Maritime provinces of Newfoundland and Labrador will also drop.

The CREA believes the average home price in our province will see the greatest drop, falling by 2.5%. The drop next door in Saskatchewan will just be half that at 1.2% and out east, the association says the drop will be 1%.

Meanwhile, the rest of the country is predicted to see home prices creep higher in 2016 by 1.4%, to an average of $448,700.  The leader in Canada will likely by Ontario, leading other areas with an increase of 2.9%.

The main contributing factor to a gentle rise in average home prices continues to be historically low interest rates. Perhaps an impingement to an even higher increase will be the federal government’s recent changes to mortgage rules, intended to target consumers purchasing homes over half a million dollars, primarily in the Vancouver and Toronto housing markets where home prices are the highest in the country.

The new mortgage lending rules which will require higher down payments for homes over $500,000, will come into effect next year, may affect sales in Edmonton to a lesser degree than in Canada’s major markets.  However, the timing is unfortunate for markets in Alberta considering current economic times.

This year will end with a bang as half the housing markets in the country performed better than the CREA had initially predicted.  Because sales in B.C. and Ontario were so strong, the association revised their 2015 estimates and says Canada will have a record year with the second-highest number of sales ever.

It seems like yesterday that homes in the suburbs of Edmonton and Calgary just couldn’t be built fast enough for Alberta families.  Now, new homes are sitting empty.  In the new construction sector of the Edmonton market, 33% are waiting to be sold or rented.

In a report released by ATB financial, the number of unabsorbed homes has risen by 30% in the last 12 months.  The new home market in Calgary is doing better with just a 5% increase in unabsorbed homes over the past year.  The report, prepared by ATB economists, indicates that Calgary, with more head offices and higher salaried jobs, has not been impacted as greatly when it comes to selling new homes.

More Alberta worries

A National credit agency has released new figures saying Albertans are starting to be delinquent with personal debt payments. TransUnion reports that the average Edmontonian is carrying personal non-mortgage related debt of $24,414, compared with $28,159 in Calgary.  Alberta surpassed the average debt-per-person figure nationally just within the past three months.

Historically, Alberta reported lower delinquencies or loan defaults that other provinces.  Across the country, TransUnion says Canadians as a whole are managing their debt with consumers becoming more educated about the consequences of carrying a high debt load.

The average personal debt-load across Canada is $21,247.  This figure is independent of mortgage debt.

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