CALGARY - The city’s red hot resale housing market this year has “far exceeded” expectations but the real estate boom will likely cool down slightly in the second half of 2014, according to a report released Wednesday by the Calgary Real Estate Board.

In its mid-year update, the board said price growth for the typical home in Calgary in 2014 is expected to increase by eight per cent on an annual basis due to strong gains in the first half of the year while overall MLS sales will end up 5.5 per cent higher than last year.

At the end of June, Calgary sales had increased by 13.6 per cent, or 13,926 units, compared with the same period last year while prices were up by 11.2 per cent.

Ann-Marie Lurie, CREB’s chief economist, said the city is benefiting from growth in the energy sector which has supported employment gains and helped attract record levels of net migrants to the area.

“Probably the biggest, unexpected change (from the beginning of the year) was really the price growth. The price growth was far stronger than we had originally anticipated,” said Lurie of the benchmark price of $458,100 at the midpoint of the year. “Originally when we did our forecast last year we thought the market would move into balanced conditions a lot sooner and that didn’t happen because the sales growth was far stronger. It continued at a strong pace because if we look at some of the underlying factors migration was at record levels last year. That’s not something that had been forecast.

“That really supported a more prolonged period of stronger sales growth. Even though the listings were increasing, and increasing at a fairly strong rate, that was getting absorbed. It didn’t give the market that opportunity to move into more balanced conditions and basically slow off some of that price growth.”

According to Canada Mortgage and Housing Corp., net migration to the Calgary census metropolitan area reached a record 45,168 in 2013.

In its annual forecast at the beginning of January, the real estate board had predicted sales would increase this year by 3.6 per cent from 2013 while prices would grow by 4.3 per cent.

“Currently, the market is still very active as there is still low supply and high demand for properties in all price points,” said Grace Yan, a realtor with Sotheby’s International Realty Canada in Calgary. “We are still seeing lots of migration to Calgary due a strong economy and a strong job market. We will most likely see the market stay strong and eventually stabilize throughout the year.”

The CREB said last month was the first time since February 2011 that city-wide year-over-year inventory levels increased.

The report also said tight rental markets in the city have supported the resale market.

“With affordable options in the condominium market, we’ve seen a rise in the demand for condominium product,” said Lurie. “Low mortgage rates and positive economic conditions will continue to support demand for this more affordable product through the remainder of the year. However, rising listings have already been pushing this market toward balanced conditions that should help ease price growth in the second half of the year.”

The energy sector continues to be the driving force in Calgary’s resale housing market but it is also the market’s largest long-term risk, said CREB.

“Based on the current situation, it’s unlikely that volatility in the energy sector will have any impact on the housing market for the remainder of this year,” said Lurie. “The more immediate concern is with any potential mismatch between consumer demand and available supply in both the resale and new home sector. This could result in some pockets of the market being oversupplied and others being undersupplied, influencing price growth.”

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