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One of the important reasons is that although we are in a period of strong demand and many people want to own a house of their own, the number of homes available for sale on the market is at an all-time low. Because no one wants to sell.
Many experts say this may have something to do with the move by the Bank of Canada (Bank of Canada) to raise its benchmark interest rate to 0.5 per cent.
They expect the move to be the first in a series of small interest rate hikes this year aimed at curbing inflation, which has risen to its highest level in decades.
It is also the first time the bank has raised interest rates since 2018. Before the pandemic, the ECB raised interest rates at 1.75 per cent, then quickly cut them to 0.25 per cent to help the economy.
“A month is not a trend, but if there are any signs in February, more sellers may eventually enter the Canadian real estate market,” Robert Hogue, senior economist at RBC, wrote in a new report.
As he expected, this trigger did allow more sellers to enter the housing market in February, driving an increase in the number of newly listed homes across the country. This is most evident in Calgary, where the number of new listings surged 69 per cent from the previous month, setting the stage for record sales in February. Although the seller has entered the market, this does not mean that house prices will fall.
It is reported that Calgary’s MLS composite house price index (MLS Home Price Index) rose 5.9%, or C $27000, between January and February, and house prices rose 16.1% from a year earlier.
The increase in the number of listed companies in Toronto has also failed to curb the rise in house prices. Toronto is now Canada’s most expensive market, and its MLS house price index has risen 6.4% since January and C $80, 000 in a month.
House prices here have risen by C $354000 (35.9%) since February 2021. House prices in Vancouver rose 4.6% from January and 20.8% (C $226000) from a year earlier.
Hogue says it is estimated that since January, sales of second-hand homes have fallen 6 per cent, while sales of new homes have risen 12 per cent, which may represent a first step towards a more balanced market.
The economist said the increase in the number of newly listed homes is important because sellers will play a central role in the formation of the property market in the spring.
If the number of sellers does not pick up sharply, house prices will continue to soar until interest rates rise enough to dampen demand. Hogue added: “We expect significant changes in the further direction of the market and prices in the coming months.”