Scotia: Canadian Housing Market An Outperformer, But Cooling

Scotiabank released their Global Real Estate Trends report today and found that many “residential property markets around the world remain under considerable stress” with the majority of the markets they track showing y/y  declines in Q1 2012.

Source: Scotia

Regarding Canada in particular, Scotia writes:

Canada’s housing market remains an outperformer among developed nations, but conditions here too have cooled. Adjusted for inflation, the national average house price fell 2% y/y in Q1.

Price trends are relatively steady in the majority of local markets, though a few, notably Toronto, continue to report strong appreciation. Despite historically low borrowing costs, demand has been tempered by moderate income growth and tighter mortgage insurance rules.

Meanwhile, supply conditions are becoming better balanced in most parts of the country. We anticipate fairly  flat sales and average prices over the latter half of the year.

It’s looking like Calgary can’t be included in the “most parts of the country” category as sales levels are far elevated from the last several years.

You can view the entire report here

Eyes on Toronto & Vancouver

Earlier this week, TD released a report on the two cities stating that they expect both markets to experience a price correction of at least 15% in the next 2-3 years.

TD believes the correction is likely to be reasonably gradual, but a quicker & more pronounced correction could occur  if the Canadian economy were to get hit by a severe shock from abroad.

You can read that entire report here

2 responses to “Scotia: Canadian Housing Market An Outperformer, But Cooling

  1. interesting. I have a portfolio of 8 residential properties in calgary, looking at my city valuations for 20011/2012 that I just paid vs the peak in 2007/2008 they are currently down 14.7% in assessed value. With rentals becoming very tight it will be interesting to see what happens to prices over the next 18-24months if oil prices stay north of $80+

  2. Here’s a follow-up to the TD report regarding Toronto & Vancouver:

    However, it is important to put that figure into perspective: a 15% correction in home prices lowers the average price in Toronto and Vancouver
    down to around $425,000 and $600,000, respectively.

    This only lowers them to the levels seen in early-2010, which are roughly equivalent to their pre-recession peaks. In other words, the correction will only unwind the imbalance that has developed over the last 3 years. Another important factor is that the correction will occur over several years.

    This timeline is due mainly to the fact that, so long as Europe’s fiscal crisis is contained, there is no catalyst to drive a precipitous decline in housing activity, such as a sharp increase in interest rates or in the unemployment rate.

    Source: Weekly Bottom Line, June 15

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