Canadian home prices are expected to rise 0.9 per cent next year, to an average of $409,300, the Canadian Real Estate Association says in its latest monthly report.
But the industry group is predicting that home sales will trend downwards next year, with interest rates "edging slightly higher."
"While sales nationally are still expected to peak this year and trend lower throughout 2015, they are not expected to return to weakened levels recorded in the first quarter of 2014," CREA said in a statement.
The association noted that sales were stronger than expected this year, due to lower-than-expected mortgage rates.
Sales growth seems to be fizzling at the moment. November numbers were up 2.3 from the same month a year ago, but that's a much slower pace of growth than was seen a month earlier, when October home sales were up 7 per cent.
CREA sees sales rising next year in markets where activity has been flat over the past few years, namely the Maritimes and Quebec. It sees relatively weak sales growth of 1.1 per cent for Ontario, about half a percentage point growth for B.C. and virtually no growth in Alberta. It forecasts sales declines of less than one per cent for Manitoba and Saskatchewan.
Those numbers are so much weaker than sales growth has been over the past few years that they would indicate a notable slowdown in the housing market.
CREA sees "eroding affordability" holding back the housing markets in Ontario and B.C., while falling energy prices will put a damper on the Prairie provinces.
Teranet's home price index, released last week, showed house prices falling in 8 of 11 major metro areas over the past month. Only Edmonton avoided falling house prices. However, the house price index was still up 5.2 per cent compared to the same period a year earlier.
