UnionCity Condos markham.The Canadian real estate market. House prices in Canada have soared by 50% in the past two years, and now they have finally peaked. With the rise in loan interest rates, people’s purchasing power has been impacted. Although house prices are still rising, the rate of increase has slowed significantly. Experts predict that house prices in Canada will decline in the second half of this year.Please Visit: UnionCity Condos markham to Get Your VVIP Registration Today!
Adil Dinani, a real estate agent, immediately felt a whiff of weakness in one of the world’s hottest property markets. A month ago, it was common for 20 buyers to fight a bidding war in his Vancouver real estate deal.
Real estate developers and economists agree that Canadian house prices have soared by more than 50% in the past two years, and that trend is changing. Higher mortgage rates are driving down purchasing power, and provincial governments are taking steps to control the market. Although these changes have not yet been reflected in the overall price data, and some are even rising, industry veterans say the housing market may have reached a turning point.
“We may see some houses directly reduce prices,” said Robert Hogg, a senior economist at Royal Bank of Canada. ”
He said there could be a “single-digit percentage decline” in Toronto and Vancouver, the two most expensive cities in the country, in the second half of this year.
Although it has never been possible to predict a collapse in the Canadian real estate market for most of the past 30 years, there has been at least a brief decline. About five years ago, when the government’s policy of slowing the market coincided with a central bank raising interest rates, house prices fell in both Toronto and Vancouver. This is similar to the current situation, and there is likely to be another slowdown.
Like the United States and many developed countries, record low interest rates and the demand for more living space have fuelled the housing boom in Canada. What makes Canada unique is that house prices are rising particularly fast, resulting in an increase in the ratio of house prices to income. This could make it the first stop in the global shift to higher interest rates.
The Bank of Canada raised its benchmark interest rate to 1% from 0.5% at its policy meeting on Wednesday as inflation hit a 30-year high. And the market expects as many as six more interest rate hikes this year.
Stephen Brown, an economist at Capital Macro, said such a large increase in interest rates would reduce the purchasing power of buyers by as much as 1/4. ‘There may not be enough people to afford the current price at a higher financing cost,’he said.
When interest rates rise, “market-adjusted prices need to fall to a level that median households can afford,” he said. There may be room for price reduction. Prices have soared so much before, and now there may be a gap to attract more buyers. “