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Indeed, starting in the second half of 2020, Canadian house prices seem to be on a rocket, especially in areas around traditional big cities. The younger generation in Canada is finding it much more difficult to buy a house of their own than it was 20 years ago. In the 1970s, a young man, full-time, worked for five years to save up a down payment on a house (* 20% of the average house price is calculated here). In 2021, a young man would have to work full-time for 28 years.
According to the Canadian Real Estate Association, average house prices have risen by more than 50% in the past five years, and the growth rate has not slowed. Nationwide, average house prices rose 13.3% in August from a year earlier.
Now that the Liberal Party has won the general election again, the plan promised in its campaign platform to ban foreigners from buying houses for two years will be implemented. In addition, the liberals have promised to build and maintain as many as 1.4 million homes, 30 per cent more than the 1 million promised by the Conservatives. In the next few years, it is believed that a large number of houses will be put into the market to alleviate the current situation of insufficient inventory in the housing market and grabbing Offer.
A new report from the Royal Bank of Canada (RBC) RBC makes a similar forecast. A total of 320000 new homes were under construction in Canada in the second quarter of 2021, the highest since 1977, the RBC reported on September 27th.
Such a large scale of housing under construction is expected to greatly alleviate the current problem of low housing inventory.
Even though the cost of construction materials such as wood soared because of the epidemic last year, skyrocketing housing prices boosted the confidence of builders and did not stop construction.
If at the current rate, people can not help but worry that the current overheated seller’s market will gradually cool down or even fall sharply because of the continuous investment in the housing market.
Even if the Liberal government completes its plan to absorb 1.2 million immigrants in 2021-2023, new houses will take a long time to be digested by immigrants, not to mention that not all immigrants will be able to afford to buy a house after landing.
In the next two years, 320000 homes will be put on the market one after another. In the second quarter of this year alone, 215000 new homes were completed in Canada, up 14.71% from a year earlier and the highest since 2006. However, it has not been able to significantly alleviate the current overheated housing market.
The editor believes that many houses under construction are apartments, which are not the first choice for some investors compared to detached or semi-detached houses in a pandemic.
The RBC report also confirms this: most of the new apartments under construction are economical and small apartments, with a large proportion of apartments. So it’s a crackdown on the current apartment market.
In addition, during the pandemic, many real estate developers were unable to hand in their houses on schedule because of a broken capital chain, which dashed many people’s dreams of buying houses. And now the real estate market is overheated, which makes many people be very careful about buying future housing now.
However, the highest delivery volume in 30 years is indeed an indisputable fact. At that time, it will also give many families with rigid demand to buy a house, providing more choices, which is bound to cool down the real estate market. As for whether there will be a cliff-style decline, it is not clear yet.
