Limited market supply will support housing prices growth
According to the recent report by Oxford Economics, reduced supply in the Vancouver and Toronto housing markets will become a key factor supporting the increase of national real estate prices this year.
“This forecast is based on a moderate slowdown in market speculations and foreign buying activity combined with the continued price growth, caused by the non-speculative demand and limited supply,” – the report says.
Real estate prices were up by 50% in Vancouver since 2014, while GTA showed a 35% increase during the same period.
Oxford Economics says the national house price increase will reach 6% in 2017, following a 10% rise of the previous year. Nevertheless, with the latest federal rules changes, the real numbers may exceed the initial forecast.
The report warns that consumers have to get ready for a significant sales drop and slower growth pace in the nearest future.
“In addition to it, higher mortgage rates, high household debt level and stricter lending regulations will also reduce the demand,” - Oxford Economics noted.
Last year, there were several federal and provincial changes introduced, which aimed at slowing the price growth in Canada’s hottest real estate markets. The B.C. government implemented a 15% for foreign buyers, while we’ve also seen other important federal rules changes in 2016.