Canadian Property Market Set for a Period of Stability
27 July 2011
The property market in Canada has been relatively volatile over the past few years, but now it looks as if it is settling into a more stable period of activity.
A recent report by the Royal Bank of Canada on the resale home market within Canada has forecast that home prices will increase by 4.4% this year, before growing by just 0.4% next year. It's expected that the number of home sales will increase by 0.9% this year, and will remain the same for 2012.
The RBC report anticipates that the property market will remain relatively calm, and that higher interest rates may cool demand, but won't kill it completely. The housing market in Canada has been affected by the global financial crisis, as well as domestic policy changes, including stricter lending rules and the introduction of harmonised sales tax in British Columbia and Ontario.
Property values in Canada have doubled over the last 10 years, and rebounded quickly after the recent economic downturn, in contrast to their neighbours in the South.
The property markets in Alberta are expected to have the highest price increases at around 7%, after prices declined by 13.6% during 2010. It's a slightly different story in British Columbia, as the high prices here mean that many people cannot afford to buy property, and the RBC report is forecasting a decline of 1.6% in property prices for 2012. Homes in certain parts of the Vancouver area have continued to see huge price increases this year, despite home sales slowing.