Real Estate News

Canada’s real estate market downgraded from worldwide hotspot

Average residential price growth went from 14.2% in 2017, to 2.9% in 2018. The mortgage stress tests, increasing interest rates, and the current uncertain political and economic climate have all combined to help slow demand
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If you have the nagging feeling that things drastically changed for Canadian real estate in 2018, then you get a pat on the back. The Teranet/National Bank house price index, released Wednesday September 12, shows that Canada has the slowest market activity since the 2008/2009 housing crisis. In another report, by Knight Frank, Canada’s drop from the elite list of worldwide property markets was confirmed. According to the firm, which specializes in high-net-worth commodity tracking, Canada is no longer one of the hottest real estate markets in the world. Canada dropped from the No. 4 spot to No. 37 out of the 57 countries analyzed.

Average residential price growth went from 14.2% in 2017, to 2.9% in 2018.

There’s good reason for the downgrade. Average residential price growth went from 14.2% in 2017, to 2.9% in 2018. Though this slowdown in home price appreciation is welcome news for hopeful homebuyers in Toronto and Vancouver it may come as a surprise to residents in not-so-large urban areas in Canada. In particular, investors or empty-nesters who are relying on the equity in the home — which is impacted by a home’s value — may feel a bit of trepidation given the current slow down.

According to the reports, factors such as the Canadian government implementing mortgage stress tests, increasing the interest rates, and the current uncertain political and economic climate have all combined to help slow demand. That’s because the net effect of all this uncertainly and policy changes is that it’s far more difficult for buyers to borrow money.

The silver lining, for those not tied to Canadian real estate, is that the upward trend in worldwide housing markets. The fastest growing global hotspots are Malta, Hong Kong, Latvia and Slovenia. Like Canada, previously hot markets such as Australia, New Zealand and Mainland China have also slowed.

Unfortunately, even with the overall global trend of slowing market, this doesn’t mean that most of Canada is in a buyer’s market. There are still local markets with quite a bit of momentum. Condos and townhouses remain in a seller’s market for most of the GVA and GTA, while most property types in the cities of Montreal and Ottawa have seen an impressive price acceleration since spring. As more and more investors move away from Vancouver and Toronto, it’s safe to say their momentum will continue well into 2019.

Misael Lizarraga
Misael Lizarraga

Misael started as an English teacher in Mazatlan, Mexico but his passion was in real estate. Now, he works with a handful of clients reporting on real estate news from across the world under his primary business: realestateguy.com