forma condos.The rise in house prices in Canada is about to reach an inflection point. Adil Dinani, a real estate agent, expects prices in CAN to have peaked.Please Visit: forma condos to Get Your VVIP Registration Today!
A month ago, a house in Vancouver would attract more than 20 buyers. Now, only one offer appears occasionally, and some people even bargain.
“it has peaked,” Dinani said of Canada’s record real estate boom. He estimates that the craze peaked sometime in February.
Real estate agents and economists are seeing a shift in the trend after Canadian house prices have soared by more than 50 per cent over the past two years. Just as politicians are taking steps to control the market, higher mortgage rates are dampening buying. While these changes have not yet been reflected in the rising total price data, industry veterans say things may have reached a tipping point.
Robert Hogg, senior economist at the Royal Bank of Canada (RBC), said: “We may see some direct price falls. The two cities with the highest house prices, such as Toronto and Vancouver, are likely to see single-digit declines in the second half of this year. ”
While predicting a Canadian property crash has been futile for most of the past 30 years, there is at least a precedent for a temporary decline. About five years ago, house prices fell in Toronto and Vancouver after the central bank raised interest rates. This reflects what is happening now and could point to another potential slowdown.
What is happening in Canada may also happen in other regions.
The same forces driving soaring house prices in the US (USA)-record low interest rates and demand for improved housing-are reversing. Canada has the highest price-to-income ratio among the major western economies, so it will be the first to shift.
With inflation at a 30-year high, the Bank of Canada (BoC) is expected to raise its benchmark interest rate to 1 per cent from 0.5 per cent at its policy meeting on Wednesday. The market expects as many as six more interest rate hikes this year.
Stephen Brown, an economist at Capital Economics, said such a rise 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, the price of clearing the market suddenly needs to fall back to a level that medium-sized households can afford,” he said. There must be a shock wave. ”
At present, the direct fall in prices is not common enough to slow down the overall momentum of the market. Benchmark house prices in Toronto still rose in March, albeit at the slowest pace in six months. The same goes for Vancouver and Montreal.
This may not last long. The Montreal Real Estate Association named its latest monthly sales and price data “final surge (The Final Surge)”. The shift in the balance of market power is beginning to be reflected in more subtle indicators, such as the ratio of sales to new listings. Although the indicator is still good for sellers, it begins to move in the opposite direction. It all happened before the country’s traditional spring buying season.
