Ontario House Prices, Sales Will Increase 2012-2013 Predicts Central 1 Credit Union: Fears of Bubble, Price Collapse Are Overblown Report Says

TORONTO, ONTARIO--(Marketwire - April 20, 2012) - Ontario house prices will keep hitting new records for the next three years, says the latest forecast, Ontario Housing Outlook 2012-2014, released today by Central 1 Credit Union.

"We expect prices and sales will continue to grow for the rest of 2012 and through 2013," said chief economist Helmut Pastrick. "Central 1's forecast is for Ontario's economy to grow moderately in coming years and the housing market will keep pace. Sales will slow a bit in 2014 but prices will keep rising."

Central 1 expects Ontario's Gross Domestic Product to grow by 2.4 per cent this year, 2.7 per cent in 2013 and 2.4 per cent in 2014, led by private sector activity, as governments at all levels struggle to trim their deficits.

Interest rates will remain near historic lows, even as they start to rise next year, keeping sales moving and prices rising, Pastrick said.

Highlights:

• MLS® home sales will rise 2 per cent to 204,400 units this year, stronger than earlier forecast.
• Sales will rise to 207,200 units in 2013, before dropping slightly to 205,000 in 2014.
• Average house prices will increase about 3.4 per cent this year to $378,700, another 4 per cent to $393,000 in 2013 and 2.6 per cent to $403,200 in 2014.

"I don't agree with fears that record house prices are signs of a price bubble that must soon burst," Pastrick said. "While price levels are high relative to incomes, low interest rates are keeping mortgage carrying costs manageable. I expect rising rates will dampen demand a bit, but economic growth and growing employment will offset that decline."

The full report is available here: http://www.central1.com/publications/economics/pdf/ea/ea%202012_ont02.pdf

Central 1

Central 1 is the central financial facility and trade association for the B.C. and Ontario credit union systems. Central 1 represents a consumer-oriented, full-service retail financial system that serves 2.9 million members and holds $80 billion in assets and is owned primarily by its member credit unions, 45 in B.C. and 106 in Ontario.

With offices in Vancouver, Mississauga, and Toronto, Central 1 provides a wide range of services such as liquidity management, direct banking, and payment service solutions. For more information, visit www.central1.com.