Canada’s real estate market shows the strongest price growth in a decade
Due to significant political changes in the world and a number of federal measures aimed at improving the affordability level in the country, last year turned out to be a strong hit for the national real estate industry. And the latest data from the Canadian Real Estate Association only proves it.
The recent report by Better Dwelling shows the national average price for all types of homes rose by 14.4% last year and reached $581,400. It’s the largest increase in ten years, which almost reaches 14.43% reported in 2006.
Bank of Canada is warning about sharply growing housing debt level
Almost a third of recent homebuyers in Canada who had high-ratio mortgages, wouldn't be able to qualify for the same mortgage now, as they wouldn’t meet the new requirements introduced by the government last fall.
That’s one of the facts included into the central bank’s twice-a-year report, which focuses on the strongest risks to the national financial system.
The report called the Financial System Review points to a well-known issue as the main threat to Canada’s economy – a high debt level caused by sharply growing real estate prices.
Economists’ forecasts on Canada’s real estate market in 2017
Toronto housing market stays hot
According to James Laird, co-founder of RateHub, the GTA market will show the strongest performance this year. In his opinion, the main reason for that is the supply and demand issue. We don’t have enough detached and semi-detached houses on sale, while many potential buyers are looking for them, pushing prices even higher.
Sal Guatieri, senior economist at BMO Capital Research, believes the Toronto market will cool slightly, however, stay strong this year. “The prices will likely keep growing, although not by 20%. They are expected to show mid-single digits in Toronto.”
Vancouver market may cool down
In this case, economists have different opinions. For instance, Guatieri expects Vancouver prices to keep falling until this fall, continuing the trend started at the end of 2016. One of the reason for this downward tendency is the new tax for foreign homebuyers.
Meanwhile, Paul Taylor, president of the Mortgage Professionals of Canada, doesn’t share this idea. In his opinion, the problem is the market supply with the strong demand causing prices growth. “We’re talking about world-class cities: Vancouver is incredible and Toronto is a real financial hub.