A rampant decline in oil prices will likely slow industrial, commercial and residential development in resource-rich provinces
New York, NY (PRWEB) January 29, 2015
The Real Estate Sales and Brokerage industry is closely aligned with the health of the Canadian residential and commercial real estate markets, which are expected to grow modestly over the five years to 2015. Industry revenue generally rises with property prices and real estate transaction volumes, because real estate agents are typically paid completely on a commission basis and receive their fee only when they close a deal. According to IBISWorld Industry Analyst Stephen Morea, “during the past five years, a growing, aging, urbanizing and progressively wealthy Canadian population boosted demand for residential properties.” These strong underlying fundamentals increased demand for real estate brokers and pushed up housing prices, leading to higher industry commissions. As a result, industry revenue is expected to increase over the five years to 2015.
However, IBISWorld anticipates a slight drop in industry revenue in 2015, as a rampant decline in global crude oil prices will likely slow industrial, commercial and residential development in resource-rich provinces, such as Alberta as well as other parts of Western Canada. Prior to the drop in oil prices, real estate demand in British Columbia and Alberta were running at multiyear highs. For example, Alberta's real estate activity spiked a good amount in 2014 alone, according to the Canadian Real Estate Association. This high growth is unlikely to continue given the sharp decline in global commodity prices in 2014 and early 2015.
Nevertheless, an anticipated rise in Canadian employment and per capita income will continue to bolster residential real estate demand in the five years to 2020, particularly in major cities like Toronto and Montreal, and in Western cities like Vancouver and Calgary. “In the commercial market, industry revenue will be buoyed by increasing corporate profit margins and overall economic growth,” says Morea. Steady demand in the residential and commercial markets and restrained but expanding new real estate construction will lift industry sales volumes and commissions. As a result, the Real Estate Sales and Brokerage industry will continue to grow over the five years to 2020, with revenue projected to increase. However, operators in the industry will continue to face competition from less expensive online real estate brokerage websites, which will slowly erode average industry commissions and pressure profit margins.
For more information, visit IBISWorld’s Real Estate Sales and Brokerage in Canada industry report page.
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IBISWorld industry Report Key Topics
The Real Estate Sales and Brokerage industry sells, buys or rents real estate for others. Industry operators do not own the property, but act as intermediaries between owners or sellers and buyers or tenants.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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