6 may 2010
“But still it doesn’t show а shift occurring during the year,” said Pascal Gauthier, TD Bank economist. “At first we expected sales and prices to be strong in the first half and cooler in the second half. Now we anticipate this contrast between the two halves to be really sharper”.
Today both income and employment are recovering from the recession. At the same time the number of listings and new housing starts really surprised the bank. It had expected prices to gain 1.6% in 2011. Now the bank is calling for a 2.7% fall.
At the moment Ontario and British Columbia are bearing the brunt of the decline: 3.4% and 3% drop respectively.
“Because of the strong supply response, the market balance is now expected to be a little bit softer next year: market conditions will be more favorable for potential buyers and home prices will fall,” he said. “We now project a modest price drop for 2011.”
The forecast is more pessimistic than that of Canadian Real Estate Association, which has said that prices would fall by 1.5% in 2011, because more supply enters the market.
Phil Soper, Brookfield Real Estate Services chief executive officer, said CREA’s forecast is out of date, and the market will be much softer in 2011 (the company owns Royal LePage and Le Capitale).
“Maybe it’s conservative, but the direction is right,” he said. “Affordability is decreasing, that’s why higher prices or more expensive mortgages can push people out of the market”.