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The constant record highs of the Canadian dollar have affected investment and exports. On the other hand is the house price.
Recently, the Royal Bank of Canada (RBC) issued the worst real estate bear market warning:
The housing price correction in Canada is the deepest in half a century!
RBC explained to investors that the Canadian housing market is adjusting. Before that, RBC had already lowered its housing market forecast once.
However, RBC found that all major property markets reported further declines, and they saw a widening range of housing adjustments, which could be the most serious in half a century.
Canada’s main real estate market reported sales last month, and the figures are not satisfactory.
Both Toronto and Vancouver have reported sharp declines in sales and prices, with Toronto homes down more than 500000 in the past six months, while other large Canadian markets are also showing signs of decline.
Robert Hogue, assistant chief economist at RBC, said: “the housing adjustment is now spreading across Canada.”
“in Toronto and Vancouver, the rapid decline in sales activity is becoming one of the worst declines in the past half century.”
RBC said higher interest rates were the catalyst for the housing correction. When buyers realized that house prices could not rise forever, the red-hot property market was forced to cool down.
Davydov believes that in the future, SVT will still play a role in pushing vacant housing into the long-term rental market, and the tax revenue may also be used to encourage developers to build dedicated long-rent housing.
Pavlov, an expert in real estate investment risk management and a professor of finance at SFU University, has a different point of view. He believes that the increase in long-term rents in the market is only related to high rents. These new long-term rental houses are not subject to the rent ban of BC province.
BC province banned rent increases for existing tenants from April 1 last year to December 31 this year, but there are no rules on rent rates for new tenants. According to the CMHC report, the average asking price for new rental housing converted from vacant housing is 21.4% higher than the average rent for existing long-term rental housing.
There are also many “short-term rents” that have recently changed into long-term rents, which may only be due to the helplessness of the owners. As a result of COVID, the tourism market has basically come to a standstill, and the demand for “short-term rental housing” has plummeted.
