After a tumultuous 2018 for the mortgage and housing market, projections for 2019 housing market are filled with just as much strife.

A wealth of recent forecasts shows a landscape hindered by moderated home sales, plummeting home prices, and poor economic growth. As a result, interest rates are expected to flatline throughout 2019.

Below is a rundown of some of the latest mortgage news heading into the new year, including home sales, prices, and interest rates.

The Housing Climate for the Year Ahead Isn’t Promising, Says CREA

Expect declines in the double-digits for national home sales in 2019 housing market , believes the Canadian Real Estate Association (CREA). These kinds of poor numbers haven’t been seen in half a decade.

The CREA explains that the government is doing what it can to slow down growth in the housing market. As a result, even with supportive population growth, there will be little reprieve from the halting market. Tougher government policy coupled with stricter mortgage rules is stifling what would otherwise be a solid economic environment for growth.

Furthermore, home prices came to a stark, screeching halt throughout many regions. In different areas throughout Canada, the supply of homes far outweighs the number of sales.

Much of the national sales hit can be attributed to Canada’s biggest players – British Columbia and Ontario – during 2018. Unfortunately, the multi-year lows don’t end there as housing market 2019 in Alberta, Saskatchewan, Manitoba and Newfoundland will suffer similar fates.

Conversely, sales growth in Quebec and New Brunswick (and much of the Maritimes) continue to see record high numbers.

Down 4.2 % compared to 2017, Canada’s average home price has dropped to $488,600 this year.

Activity in Housing Will Level Out During the Next Two Years, Believes CMHC

According to the Canada Mortgage and Housing Corporation’s 2018 Housing Market Outlook, the Real Estate authority also envisions severe slowdown next year.

Anywhere between 194,000 to 204,500 housing units are expected to start next year, which is a notable decline.

Bob Dugan, CMHC’s Chief Economist, explains that while moderation is to be expected, prices will be more in line with income, job, population growth, and other economic fundamentals throughout the next two years.

Over the next two years, CMHC predicts the following trends:

Metro Vancouver suffering lower sales and higher inventories leading to far lower prices. Toronto will see moderate growth in home prices and sales that will parallel inflation. Given how expensive homeownership has become, the rental market is expected to thrive. Employment and population growth in Calgary will provide a boon for home sales but sinking MLS prices will only start rising again come 2020. Montreal housing starts will be bolstered due to an increase in net migration. A strong single-detached home market is expected to remain robust because of high demand.

What Does 2019 Spell for Interest Rates?

Interest rate increases won’t exactly be prolific in 2019 housing market. Particularly given sinking inflation and projected economic turmoil in both Canada and the U.S.

January rate hikes were all but a foregone conclusion a short time ago, but are now forecasted to most likely occur in the spring or summer at the soonest.

Capital Economics, amongst other experts, predict a decline in interest rates by December 2019. The Canada Economic Outlook report states that a lack of domestic demand will force the central bank to put a hike on hold before cutting rates come next year’s end.

The Bank of Canada (BoC) will only be able to raise its overnight target rate from 1.75% to 2.5% come 2020, explains the B.C. Real Estate Association in its most recent Mortgage Rate Forecast. The report predicts only 1 rate hike in 2019, though it adds there could be 2 at most. Only variable rates will slightly increase with a higher prime rate but 5-year fixed rates probably won’t budge or even decline during Q1 of next year to 3.64% until it rises to 3.74% by Q2.

A Slight Increase in 2019 Home Prices Expected by Real Estate Firms

Royal LePage and Re/Max both envision growth, albeit modest, in housing prices in 2019.

The GTA should see an average home price of $854,552 – an increase of 1.3%, according to Royal LePage. Vancouver homes will jump up to an average of $1.29 million for a meagre 0.6% increase. While Montreal will experience a record 3% growth for average home prices at $421,306. The firm expects the national median home price to grow by 1.2% next year.

Royal LePage CEO Phil Soper explains that Canada’s housing market will stay in its correctional cycle. Thus housing prices rising so slowly.

Re/Max, meanwhile, is forecasting home sales to rise an average of 1.7% nationally. The largest increases are expected in London, ON (+17%), Chilliwack, B.C. (+13%) and Windsor, ON (+13%).

Re/Max’s annual report also expects that first-time buyers will “dominate” the housing market in 2019, with young couples and families focusing on condos and townhomes in the $350,000 to $500,000 price range.