the largest condo project in toronto.Canadian immigrants can’t stop house prices from plummeting! BMO Capital Markets said: there is no historical evidence that population growth will prevent house prices from plummeting.Please Visit: the largest condo project in toronto to Get Your VVIP Registration Today!
During the last major collapse in house prices, Canada’s population grew even faster. They warn that interest rates have a far greater impact on house prices than on the population.
Despite the population surge, the latest figures from Toronto and Vancouver show a decline in sales. The two cities are reported several weeks ahead of national data, but the trend is expected to be the same. The latest figures show a decline in home sales in both cities. Higher interest rates curb demand and have an impact on speculative mentality.
BMO explained that because of the base effect, the decline in sales sounds bigger than it really is. Trading volume is still rising, but it has not completely eliminated the decline. Douglas Porter, the bank’s chief economist, said: “even so, the decline is clear. Sales in Toronto are down more than 40% from a year earlier, and this is only the early stage of high interest rates.”
Many people believe that tens of thousands of immigrants are coming, creating a price bottom line that can stop prices from falling. But people ignore the fact that 1/5 of new immigrants want to leave because of the cost of living. And there is also the fact that research shows that Canada’s competitiveness is declining.
BMO’s latest chart shows that there is no correlation between population and house prices. In the chart: the red line represents the change in Canadian population, while the blue line represents the change in Canadian house prices. House prices plummeted in the early 1990s, when population growth was strongest.
Many people will believe to some extent that population growth will lead to a rise in house prices, but don’t forget what happened in the early 1990s, which was one of the most difficult periods for the Canadian big housing market.
Over the past 40 years, the three years from 1988 to 1990 happened to be the strongest period of population growth-but that did not stop house prices from plummeting as borrowing costs rose sharply at the end of that period.
Demand drives up house prices, but demand is not just about the population. Liquidity, which depends on leverage and credit availability, will eventually boost prices. It doesn’t matter whether the house price was C $1 million last week, if the next qualified buyer is only C $800,000. The seller either accepts less money to sell or keeps the house.
Real estate agents in Toronto, Vancouver and Montreal have revealed that their clients are paying attention to or selling homes that receive significantly less offer than in previous months, according to Global News.
Toronto apartments under 1000 sq ft and semi-detached houses priced less than 1 million have received at least 15 offer in the past, but now only about five, according to a real estate agent in Toronto.
The real estate agent said the trend was driven by the fact that under the influence of interest rate hikes and inflation, buyers were more nervous and cautious to set foot in the market in case things changed rapidly, preferring to wait and see on the sidelines to see how the housing market would change and to see if the recent rate hikes would significantly reduce their purchasing power.
A real estate agent in Montreal said many of his clients were questioning why they would bid above the asking price if sales were falling, while buyers who succeeded in grabbing offer were worried about whether they were spending too much money without many people robbing offer.
However, the real estate boards in Montreal, Vancouver and Toronto reported that although home sales in all three areas slowed in April, the average price was still higher than a year ago.