House prices in Calgary and Edmonton are forecast to decline in 2019, according to real estate firm Royal LePage.
The company’s Market Survey Forecast said the median home price in Calgary is expected to decrease 2.3 per cent to an aggregate price of $473,104 at the end of 2019.
The median home price in Edmonton is forecast to decrease 1.9 per cent to an aggregate price of $378,691 at the end of 2019.
Persistently weak oil prices have continued to weigh on the real estate market, resulting in lower consumer confidence in Calgary, said the report.
It also said that reduced affordability from recent interest rate hikes and the 2018 federal government mortgage regulations are expected to continue to negatively impact prices and sales activity in 2019.
“Until consumers adapt to mortgage rules changes, and full-time employment rates increase, Calgary’s real estate market will not see notable price gains. In 2019, we are expecting a modest price decline as a result of high inventory and weak demand. Saying that, vacancy rates have declined, which may prove to be an opportunity for investors and landlords considering a move to Calgary,” said Corinne Lyall, broker and owner, Royal LePage Benchmark.
While the oil sector is the most significant economic factor in the region, there are some positive trends emerging that are supportive of stable home price appreciation, said Royal LePage, adding that Calgary has reported positive in-migration in 2018, which is a reversal from previous years as workers left for employment in other provinces.
As with Calgary, the effects of low oil prices have impacted all areas of the provincial economy, including real estate in Edmonton, it said. Jobs related to all streams of oil extraction, transportation and distribution are being cut, reducing confidence in the real estate market, added the real estate company.
“Regardless of the uncertainty in the energy sector, home prices in the city remain affordable and attractive compared to other regions in Western Canada,” said Tom Shearer, broker and owner of Royal LePage Noralta Real Estate. “Buyers will have a great opportunity in 2019, especially at the beginning of the year, to purchase a new home while inventory is high and competition is relatively low.”
He said the new mortgage stress test rules reduced buyers’ purchasing power by about $100,000 in Edmonton.
“The OSFI 2018 mortgage rules will continue to weigh on home prices in 2019,” said Shearer.
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