TORONTO (Reuters) - Sales of existing homes in Canada rose in November from October as gains in Toronto and Vancouver once again helped offset softness in other markets, a report from the Canadian Real Estate Association showed on Tuesday.
The industry group for Canadian real estate agents said sales activity was up 1.8 percent last month from October. Actual sales for November, not seasonally adjusted, rose 10.9 percent from November 2014.
CREA’s home price index rose 7.1 percent from November 2014.
The continued gains in home sales and prices in Canada’s two largest markets has renewed fears of a housing bubble, and the federal government last week raised the minimum down payment on more expensive houses to try to cool the market.
The resilience in Toronto and Vancouver also prompted CREA to upwardly revise its forecast for 2015 and 2016, a move that has become standard in a country that has defied for years predictions that the market will cool.
But even as CREA raised sales and average price forecasts for Ontario and British Columbia, it lowered forecasts for sales activity in the energy heartland of Alberta and for prices in Alberta, Saskatchewan, and Newfoundland and Labrador, due in large part to the long slump in oil prices.
The forecast for national sales in 2015 was revised higher based on the anticipated strength in Toronto and Vancouver. National sales were projected to rise by 5 percent to 504,000 units in 2015, up from a 3.3 percent rise forecast in September.
Sales are expected to fall 1.1 percent to 498,600 in 2016. In September, CREA had forecast sales to be flat at 495,000.
The forecast for national average home price growth was revised upward to C$442,600 in 2015, representing an increase of 8.4 percent, up from a 6.2 percent increase forecast in September. Prices were expected to rise a more moderate 1.4 percent to C$448,700 in 2016, CREA said.
With official interest rates expected to stay lower for longer in Canada, even as the U.S. Federal Reserve begins tightening, low borrowing costs should support sales and prices in 2016, CREA said.
But the industry group warned that the government’s changes to down payment rules risk cooling housing markets beyond the intended targets of Toronto and Vancouver.
“In particular, the regulatory changes are also likely to reduce sales activity in Calgary once they take effect in early 2016,” CREA said in its forecast.
Reporting by Andrea Hopkins; Editing by Chizu Nomiyama and Alden Bentley