Canadian Regional Housing Outlook: Trading Spaces

TD Economics
Derek Burleton, Vice President and Deputy Chief Economist
Diana Petramala, Economist


• Overall Canadian housing market conditions are expected to remain stable over the next few years.  However, there have been some major changes to the regional story in light of the plunge in crude oil prices and interest rates.

• Commodity driven economies were outperformers in 2014, as decent income gains and strong migration boosted housing demand. However, the plunge in oil prices will deliver these markets a heavy negative income shock. Markets are likely to correct in Calgary, Edmonton and major markets in Newfoundland.

• Elsewhere, economic conditions are expected to remain favourable to housing activity. The drop in interest rates will help add an additional boost to resale activity – but the impact is likely to be modest. A strong performance in recent years suggests there is little pent-up demand in some major markets, like Toronto and Vancouver. Meanwhile, while not a new story, the amply supply of homes on the market will be a limiting factor on home prices from coast to coast.

• Overall, we continue to expect a moderation in the Canadian real estate market over 2015 and 2016.

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