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Monday, March 06, 2006

Rising rates not to affect Alberta housing market

Royal Bank conducts a survey every year (or at least has for the last bunch of years) asking people across Canada what they think about the housing market, and whether or not they plan on buying real estate in the next few years.

This year's survey predicts that much of Canada will start to see a slow down in the housing market over the next while, except for Alberta and Atlantic Canada.

Some exerpts:

The share of those people saying they were very likely to buy had dropped to 10 per cent - down from 13 per cent last year and at the lowest point in more than five years. The percentage of those who plan to buy a home in the next six months also fell - to eight per cent, down from 10 per cent last year.

Yet overall intentions to buy a home within two years remained the same as in 2005 at 29 per cent, with 90 per cent of current homeowners saying they thought their home was a great investment.

The decline, she said, appears to be the result of higher interest rates, rising home prices and the fulfilment of much of the pent-up demand that has been driving the market for the last few years.

Royal LePage Real Estate Services Ltd. agrees that home sales are forecast to slow between three and five per cent in 2006, but the year would still be the second-best on record, the firm said.

Alberta held steady at 18 per cent, but the numbers decreased in other regions.

Interest rates have been rising gradually over the last few months on the back of a strong economy, and while RBC is forecasting a slight rise, it is not yet known how much they may climb.

But the Bank of Canada, on a rate-hiking trend in recent months, is widely expected to boost interest rates by another one-quarter of a percentage point with a scheduled announcement Tuesday morning.

Full article.


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