Housing Market Should Remain Stable in 2012

Byline: Kim Covert, Edmonton Journal

Housing sales and prices should remain fairly steady into next year as a slowing economy is balanced by low mortgage rates and relatively low unemployment, a report from BMO Capital Markets suggests.

"Low interest rates have fuelled Canada's housing market in the past decade, pushing prices to new highs in most regions," senior economist Sal Guatieri said Thursday. "However, a weaker economy and new mortgage rules have dimmed activity recently."

Resales have slowed to their past-decade norm under tougher mortgage rules introduced by the federal government in March, and prices have flattened in the last six months on a seasonally adjusted basis, Guatieri said in the report.

The slowing global economy should hold the Bank of Canada from raising its benchmark interest rate - now a near-record low of one per cent - before 2013. As well, an unemployment rate expected to remain around 7.3 per cent through next year should mean continued confidence on the part of homebuyers.

Just as the economies in resource-rich provinces such as Alberta and Saskatchewan are expected to out-perform other regions next year, so too is the housing market in those provinces, Guatieri said.