Make no mistake about it. Canada's real estate market is set to take a powder this year and next, according to a new economic forecast -- July's impressive spike in activity notwithstanding.
"Given the lower levels of activity in the early months of 2013," reads the monthly housing report from RBC, released Thursday, "we expect home resales to show a small decline of about 2 per cent for the entire year."
Things won't improve next year, either, according to the report, suggesting higher interest rates expected in the bottom half of 2014 will exert downward pressure on the market and "keep annual resales relatively flat (-0.6 per cent)."
That picture isn't quite as rosy as the one many other analysts are painting given the near-10 per cent rise in home sales for July, relative to the year-ago period. The average Canadian home price also shot up 8.4 per cent from the same troubled month last year when Ottawa tightened mortgage rules.
Still the slower market now being predicted by the country's largest bank is likely to benefit homebuyers on the hunt for that perfect property as competition from other buyers falls.
But the RBC forecast assumes the Bank of Canada will move to raise interest rates in the near- to mid-term. That remains a big if given a sluggish economy and real uncertainty about whether the stimulus of rock-bottom rates can, in fact, be removed this year, or even next.
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