Canada’s Property Values Rise, In Spite of Signs of Market Slowdown
The housing market in Canada showed signs of soft pedaling in November as the number of new construction sites drops. But the report contrasts with other data that showed prices are up in October, 2016 and permits for planned constructions rise, an indication the market is still quietly vibrant with strong prospects for the future.
According to statistics from the federal housing agency, new constructions in November dropped to 183, 989 units, representing a 4.3 per cent fall from October. The number of constructing multiple-units housing in Ontario fell sharply, and triggered strong growth in British Columbia, FHA said.
The drop in number of starts was higher than analysts had forecasted, but a different report showed that in October building permits rose in value by 8.7 percent — a strong pointer that housing starts are set to experience a bounce back in the next few months.
Prices for new homes are also on the increase in October as the in-demand Toronto market offsets market fluctuations elsewhere, expanding the expected robustness of the Canadian property market. Analysts are also predicting government intervention to hedge the long boom in house prices and mortgage lending.
The average price for property in Canada for October is approximated at $576,656.
In a research note, Richard Morrison, a Senior Advisor at StrawHomes “residential activity is largely a regional story, with market domination by Toronto and Vancouver and weakness in Alberta.”
Rise in housing prices driven by the robustness in the Toronto, Vancouver real estate markets
Between August and September, 2016, new housing prices increased by 0.2 per cent, the 18th consecutive time it would do so, on the wave of continued positive showings in the Toronto and Vancouver, a report by Statistics Canada noted recently.
The statistics matched analysts’ forecast in a Reuter’s poll.
The Toronto-Oshawa corridor, which represents 27.92 percent of the Canadian property market, saw prices rise by 0.3 percent; while rates in the Vancouver market increased by the same figures. Construction professionals link market conditions as reason for the gain.
Meanwhile, the central government, worried by what it says are pointers both markets are overheating, stated that it would introduce stricter mortgage rules and block tax loopholes on home sales.
The government excluded apartments and condominiums in the new housing price regime, stating that it is particularly worrying as they make up one a third of new housing.
The impact of oil slump
The boom in the Canadian property market has been unstable in recent years, partly due to the drop in oil prices. The slump has particularly slowed down property sales and prices in the energy region of Alberta. On the other hand, the government’s imposition of a 15 percent tax on property buys by non-residents affected the Vancouver market.
According to statistics from the Canada Mortgage and Housing Corps, the housing market began slowing down following strong performance in 2015 and early 2016. Figures for new multiple housing units, especially condos, dropped by 7.7 per cent in November, but single units were essentially flat.