The year 2018 is perceived to have marked the turning point for Canada’s closed monitored housing market. The country’s real estate market has tumbled from 4th position to 37th place in the current ranking globally. This places the housing markets at the bottom half of almost 57 countries surveyed.
While this information might come as a relief to the residents of major cities in Canada, it is equally bad news for property investors both locally and internationally. For a couple of years in a row, Canada’s real estate market has always been a magnet to a number of investors. These property investors have found the real estate market vibrant and promising to boost their wealth thanks to the steady growth of the housing prices.
Why the slowdown?
The real estate market in Canada is expected to tumble further due to the rising interest rates and stringent mortgage rules which are in place to cool price rises as well as home sales. However, this is not the same case in all cities. Take an example of Toronto, once a hot market, the home prices have shown some improvement since the previous poll was conducted in June of 2018. The opposite is true with Vancouver, the city with the most expensive homes in the entire world, where the prospects for the real estate market grew more precarious.
In fact, the median forecast portrayed in the Reuters poll of the sixteen analysts between September 4th and 7th projected a rise in house prices by a median of 1.7 % for 2018. This is much lower than the 1.9% in a poll conducted in June 2018. The 1.7 % is indeed below the anticipated rate of the consumer price inflation for 2018 and 2019.
Any hope in the future?
Despite the fluctuating prices and bursting bubbles in real estate markets in other competing countries like the US, China, Australia and New Zealand, Canada stands to enjoy a steady rise in home prices. Experts are optimistic that house prices are likely to rise to 2.1% by next year(2019) as indicated in the June(2018) forecast. Also, it is projected that by the year 2020 there will be an increase of another 2% which is below the prior forecast of 2.5 % but at least these two figures show an improvement in the real estate market.
This move was initiated by regulators with the aim of trying to ensure that there is a soft landing for the market which was previously propelled by low-interest rates in many years after the global financial crash. These regulations are set up to give property investors’ confidence from the fears ignited during the last economic crunch which they thought housing in major cities within Canada might become the asset price bubble.
On the other hand, the Bank of Canada is looking forward to raising interest rates once more in the near future. This decision aims at keeping the country’s economy stable should the negotiations with the US to renew the North American Free Trade Agreement does not yield any positive outcome. Away from that, the central bank left steady rates at 1.5% which has seen the housing market showing positive signs of stabilizing. As a matter of fact, the new home price rose to 0.1 percent last June (2018), which was the first real estate market gain in 7 months.
But some economists are skeptical that rates as low as 1.5% are still heavily subjecting the already indebted households to more sensitive rate rises compared to the past years. However, most of the analysts on Canada’s property market support the idea saying that it is of great significance for the survival of the real estate market.
To wrap up, Canadian Real Estate Market price is likely to rise again despite experiencing a slowdown previously. In as much as this information could send mixed reactions to the property investors, the market for homes is still vibrant in most of the cities in Canada. That is evidently starting from the Ontario City moving elsewhere as more people come to settle in those regions. Take a perfect example here; https://www.homeads.ca/barrie-real-estate., where property investors are driven by the growing demand to set up homes in cities such as Barrie among others. At least there is light at the end of the tunnel for the Canadian Real Estate market in the future.