House prices will continue to climb but earlier mortgage-rule changes could take a bite out of unit sales in 2013, according to the latest forecast from the Winnipeg Realtors Association.
The association's residential-market analyst told about 300 people attending its annual forecast breakfast Wednesday he expects to see a two to four per cent increase this year in the average selling price of a detached home sold through the local Multiple Listing Service (MLS).
Peter Squire told the audience the average price increased by 5.1 per cent to $269,949 in 2012.
But while prices should continue their upward climb, Winnipeg could be looking at another modest decline in unit sales, Squire said. His forecast is for sales to either hold steady at around 13,000 units, or possibly dip by as much as four per cent.
"I prefer to lean more toward the zero than the minus," he added. "Overall, I think it's still a really good outlook."
Squire said the main downside risk on the sales side is that last year's tightening of federal mortgage insurance rules could force some first-time and move-up buyers to delay their home purchases.
The new rules, which took effect on July 9, included reducing the maximum length of a Canada Mortgage and Housing Corp.-insured mortgage to 25 years from 30. That means some buyers, particularly first-timers with limited savings, may have to delay their purchases until they come up with a bigger down payment.
"We really haven't experienced the full brunt of that yet," Squire said in a later interview, adding the industry will likely get a better idea of the full impact once the spring buying season gets underway.
But even if sales decline a bit, it likely will still be one of the better years on record, he said, noting last year's total was the third-best on record and only 71 units off the all-time high of 13,078 set in 2007.
He said all of the fundamentals that have driven local home sales in recent years -- a healthy economy, low mortgage rates, high employment, a growing population and a tight rental market -- are still in play.
The event's featured speaker -- economist Jim Hrichishen -- confirmed 2013 is shaping up to be another year of solid economic growth for Manitoba.
Hrichishen, an assistant deputy minister in the provincial Finance Department and the province's former chief economist, told the audience the consensus forecast for Manitoba is for real gross domestic product (GDP) growth of 2.2 per cent this year and 2.4 per cent in 2014. While that's down a bit from earlier projections, it would still be in line with the projected national average increase for those years, he added.
Hrichishen said most provincial forecasts have been revised downward because of ongoing concerns about the recession and debt crisis in Europe and the "fiscal cliff" crisis in the United States, which is still far from resolved.
Year in review
HERE'S what happened last year in Winnipeg's Multiple Listing Service (MLS) market:
Unit sales: Down 0.4 per cent to 13,007 from 13,065 in 2011;
Dollar volume of sales: Up 5.1 per cent to a record $3.20 billion from $3.06 billion;
Average home selling price: up 5.1 per cent to $269,949.
HERE'S what the Winnipeg Realtors Association is forecasting for 2013:
Unit sales: Anywhere from no change to a drop of as much as four per cent;
Dollar volume: Anywhere from a two per cent decline to a two per cent increase;
Average selling price: Up by two to four per cent.