Growth in the Canadian property market appears to be running out of steam, after the Canadian Real Estate Association (CREA) lowered its forecast for home sales in British Columbia.
CREA's national forecast is largely influenced by the property markets in British Columbia and Ontario. But while sales activity is on target in Ontario, the decline in affordability in British Columbia has led to a reduction in transactions in the province during the first quarter of this year.
Changes to mortgage regulations introduced in April are also expected to marginally impact on sale activity.
Additionally, the Bank of Canada has dropped its conditional commitment to keep interest rates on hold until at least July, opening the door to an imminent interest rise, but this may not necessarily increase the cost of financing a Canadian property purchase.
"Interest rates are expected to rise slowly and at a measured pace during a new era of government spending restraint, so home financing will remain within reach for many homebuyers," said CREA President Georges Pahud.
CREA had previously forecasted sales would remain stable throughout the first half of 2010 before falling towards the latter half of this year and over 2011.
Nevertheless, national activity is still projected to hit 490,000 property sales in 2010, up 5.5 per cent from 2009 and the second highest annual level on record.
Meanwhile, average Canadian property prices are expected to rise 1.6 per cent in 2010, down from a previous forecast of a 5.4 per cent gain, taking the average price of a home in Canada to a record high of £211,870.