M city 5 condos floor plans. The Canadian real estate market is cooling. Canada’s real estate market is expected to slow further, with higher interest rates and stricter mortgage rules reducing home sales and curbing house prices, according to a survey of real estate market analysts on Monday.Please Visit: M city 5 condos floor plans to Get Your VVIP Registration Today!
In the once-hot real estate market, the outlook for house prices in Toronto has improved from the June poll, while the outlook for Vancouver, which owns the world’s most expensive property, has become more unstable.
As of September 4-7, 16 analysts predicted that house prices across Canada would rise 1.7% this year, down from 1.9% in June and below consumer price inflation expectations for this year and 2019, according to a Reuters poll. House prices will rise 2.1 per cent next year, in line with the June forecast, and another 2 per cent in 2020, down from the previous forecast of 2.5 per cent.
Robert Kavcic, senior economist at BMO Capital Markets in Toronto, said price growth in all Canadian real estate markets was very modest, Toronto and Vancouver were still adjusting past policy measures, and the Bank of Canada insisted on raising interest rates gradually.
Despite the sound performance of the Canadian economy, new rules introduced earlier this year require so-called “stress tests” on borrowers, or repayment ability, which has partly curbed the rise in home sales and house prices.
Canadian real estate has been driven by low interest rates for years, and now regulators are trying to ensure a soft landing in the wake of the global financial crisis, raising fears of asset bubbles in Toronto and Vancouver.
As long as difficult negotiations with the United States to renew the North American Free Trade Agreement do not derail the Canadian economy, the Bank of Canada is likely to raise interest rates again next month. The Bank of Canada held interest rates steady at 1.5 per cent last week, indicating signs of stability in the property market. New home prices edged up 0.1% in June, the first rise in seven months. However, some economists worry that even if interest rates are as low as 1.5 per cent, heavily indebted households may be more sensitive than they used to be.
Derek Burton, deputy chief economist at TD Bank in Toronto, Canada, pointed out that the economic environment is still fraught with risks, and trade tensions may be the most urgent risk to the regional job market in the near future. In addition, interest rates are more sensitive than past economic cycles, so this may be more meaningful than currently predicted.
Analysts who answered another question were mostly optimistic about the risks facing the Canadian real estate market due to accelerated interest rate hikes, although about 1/3 of them said it deserved special attention.
In Toronto, Canada’s largest city and home of financial capital, house prices are expected to grow faster than expected, rising 3.0 per cent next year instead of the 2.0 per cent forecast in June, the survey found. The forecast for 2.0 per cent growth in Toronto in 2018 is the same as in June.
Sebastien Lavoie, chief economist of the Laurentian Bank, pointed out that the housing market in the greater Toronto area returned to an upward trend after the adjustment of the BMUI 20 new mortgage policy, reflecting increased demand and slightly mentioning new mortgage eligibility criteria. In Vancouver, it will take longer for the property market to return to a new equilibrium as the British Columbia government takes steps to ease the pressure caused by overheated real estate.
Average house prices in Vancouver are expected to rise 1.8% this year, less than half the 5.5% previously forecast. Vancouver house prices are forecast to rise to 1.7% from 3.4% in 2019. When asked to rate housing affordability on a scale of 1 to 10, of which 10 is very expensive, analysts put the national real estate market at 6, Toronto at 8 and Vancouver at 9, unchanged from the June survey.
A growing number of respondents said that the risk of an adjustment in the Canadian real estate market has declined over the past three months, while the risk in the Toronto real estate market has also declined, with only one saying that house prices will rise. In addition, a few people believe that the risk of the Vancouver real estate market is declining.
Real estate construction is expected to stabilize later this year as housing appreciation is likely to further slow down housing construction. Housing starts are expected to be 210000 units in the third quarter, down from the previous forecast of 213100 units. It is expected to slow further to 207000 units in the second quarter of next year and remain near that level by the end of 2019.
