South Forest Hill Residences prices.Does the Canadian housing bubble start to burst?In Canada,once known as the”miracle country”,house prices have been on the rise for many years.Please Visit:South Forest Hill Residences prices to Get Your VVIP Registration Today!
In January 2019,Vancouver housing sales and sales hit an all-time low,plunging 40%.Among them,luxury property prices plummeted 11.2%in a year.
In October 2018,according to Statistics Canada,the price index of new housing in Toronto fell 1.4%from the same period last year,the biggest drop since September 1996.
According to the Toronto Metropolitan Survey of Statistics Canada,the index of new housing fell from 104.7%to 103.2%in October from a year earlier.
According to a survey by the National Bank of Canada(National Bank),the house price index of 80%of the 26 large and medium-sized cities(21 cities,including Vancouver,Toronto,Victoria,etc.)has begun to fall from its peak.
According to a report released by the Federal Reserve on January 31,the Canadian real estate boom index plunged 32%in 2018,leading the world down.In the future,it may be difficult for Canada to continue the miracle of property growth.
In fact,the general trend of the decline in the Canadian property market has long been a sign.Where did the Canadian real estate bubble come from?Why does years of growth suddenly or will face a price inflection point?The reasons behind it should be used for reference by investors.
Canada’s household debt(most of which is home loans)as a share of GDP and disposable income has been high and has intensified over the past 30 years.
The International Monetary Fund(IMF)has warned that Canada’s household debt ratio is too high.As early as 2016,Canada’s household debt-to-GDP ratio exceeded that of the United States before the 2008 subprime crisis.
Although the United States began to control and gradually reduce the household debt ratio since the subprime crisis,the Canadian government did not adjust accordingly because of the good housing market at that time.
Canada faces such a high household debt ratio,and its real estate market leverage has been rising,growing at an annual rate of 3.1%since 2001,with a leverage cycle of 18 years.
Under the influence of years of leverage,the house price bubble is becoming more and more serious,the ratio of household debt to household income is worrying,and the leverage growth rate has reached the level before the subprime mortgage crisis in the United States.
Comparing the ratio of household debt to household income in Canada and the United States,the dark gray and light gray areas are:the time range of recession in the United States and Canada,respectively.
The three-year introduction of 10 million immigrants announced by Immigration Canada in 2017 has attracted many new immigrants and international students.The influx of new people is too high to heat up Canadian real estate.
The Organization for Economic Cooperation and Development(OECD)said in 2017 that Canadian house prices were overvalued by 50 per cent.
However,Canada’s investment immigration policy continues to tighten and begins to restrict overseas home purchases.BC province,where Vancouver is located,for example,levies a 20 per cent speculative tax on overseas purchases and a 1 per cent vacancy tax on properties that have lived for less than six months within a year.
Mortgage credit growth in Canada slowed to 3.2%in the third quarter of 2018,the slowest pace in 22 years,according to the Royal Bank of Canada report.
In other words,the total demand for real estate is decreasing,and there are fewer and fewer investors and buyers.While the transaction volume of Vancouver property fell to a new record in January,the number of houses soared by 244.6%,and the signs of oversupply in the real estate market have been highlighted.
In response to the excessive housing bubble,the Canadian federal government implemented a risk stress test policy on home loans in 2018.But the impact is negligible and does not significantly reduce the overheated real estate market.
Even if the Bank of Canada raised interest rates for the first time in seven years in 2017,and then raised interest rates several times and lending rates continued to rise,it still could not slow down the enthusiasm of the market for property speculation.But now house prices may face a price inflection point,and the bubble could burst at any time.
Although the Canadian property boom index is falling,it is still above the bubble line,according to the Federal Reserve.If you buy Canadian real estate now,there will be little room for value-added in the future.
Rising interest rates have brought downward pressure on the real estate market,but Canadian mortgage loans have some special rules in floating and fixed interest rates,and bank interest rate increases only extend the repayment period and will not affect monthly payments.It is difficult for house slaves to feel clearly.
The current situation of the Canadian real estate bubble is worrying,and the housing market may face uncertainty.Looking back at the situation in other countries,where is the housing market more stable,and the real estate bubble is small,and there are new opportunities for value-added in the future?In recent years,the real estate market in mainstream European countries has triggered a new round of investment attention.