PROPERTY
“I
f we go back to when the global financial crisis really hit home in North America, Canada, like the rest of the developed world, went into recession and its real-estate
market contracted,” says Phil Soper, president of cross-border property firm Royal LePage Real Estate. “The difference is that the contraction was very short-
lived here. It was about a nine-month correction, whereas our businesses in the United States were in decline for five or six years. As a result, home prices in Canada have been appreciating since the beginning of 2010. So we’ve had five full years of appreciation, whereas, for America, this is the big year back. They had some recovery last year, but this is the biggest year in eight years, and there’s more room to grow.” The headline figures show a solid Canadian market. In October,
the Canada Mortgage and Housing Corporation (CMHC), which advises the federal government on housing policy, said that it expected 7.2 per cent year-on-year price increases in 2015. “In 2015, increased housing-market activity in provinces like
Ontario and British Columbia – provinces that have benefited from declining energy prices, a lower Canadian dollar, and
continued low mortgage rates – offset slowdowns in oil-producing provinces like Alberta,” says Bob Dugan, the CMHC’s chief economist, ref lecting on his organisation’s figures. Going forward, though, the numbers are likely to drop off. “We
expect that this counterbalancing effect will decrease over time. As such, housing starts and MLS [multiple listings services] sales are projected to moderate in 2016 and 2017,” Mr Dugan adds. According to the CMHC, the annual increase in prices will be
down to 1.3 per cent in 2016, and it will only climb to 1.4 per cent in 2017. Furthermore, the numbers are distorted by the markets in Toronto and Vancouver. The Canadian Real Estate Association reported in October that prices for the month were up by 8.3 per cent year on year, but said that the figure would drop to 2.5 per cent if Toronto and Vancouver were removed from the mix. Phil Soper says, “The Vancouver and Toronto markets have
structural limitations on supply which have resulted in much higher than average appreciation, because there aren’t enough homes available for sale – either new homes or resale home – to meet the demand. So prices, particularly in the detached home section, are rising rapidly.” ➲
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