TORONTO (Reuters) - Canadian home prices will slip and sales will slow in the first half of this year but may rebound in the second half, Royal LePage Real Estate Services said in its 2009 forecast on Tuesday.
Royal LePage, Canada’s biggest residential real estate agent, forecasts average house prices will ease 3 percent from last year to C$295,000 ($250,000). It sees the number of homes sold falling 3.5 percent to 416,000.
The company expects weakness in the housing market, stemming from dismal headlines about the worsening global economy, combined with a cooling from previous years’ “fervid” activity, to continue through the first half of the year before the market rebounds.
“Most consumers are not aware that nationally, Canadian housing market activity peaked in 2007 and has been adjusting lower since. We are well into this inevitable cyclical correction,” said Phil Soper, Royal LePage president and chief executive.
“While a grey cloud hangs over some markets, the sky is not falling,” he added.
Prices in pockets of the country, such as Regina, Saskatchewan, and Winnipeg, Manitoba, are still below the national average and will likely rise moderately, the company said. It forecasts average Regina home prices to rise 6 percent to C$243,300 this year, while it sees Winnipeg prices climbing 4 percent to C$204,900.
Vancouver, the country’s most expensive city, which experienced “aggressive” price runups in the last several years, will see the most significant decline in home prices, 9 percent to C$540,100, Royal LePage said.
Its forecast is in line with other studies released in the past month that see a dip in national housing prices and static state sales activity for at least the first half of the year.
A rebound in consumer confidence, historically low interest rates, and improving credit markets will help the housing market bounce back, Royal LePage said.
Most market observers say the Canadian market will avoid a U.S.-style housing crisis, partly because subprime mortgages make up a much smaller percentage of home loans in Canada.
Reporting by Ka Yan Ng; editing by Peter Galloway