Canada: The Housing Market

The Canadian property market looks positive according to an article in the Scotia Capital. The puzzle asked in the article is ‘Why the Canadian property market is doing more than the rest of the world’? Are we seeing the Canadian property market rising and what is the promise of this rise?

Good position of the Canadian market are indicated by various factors. A big increase in listings stock from the spring was removed within a very short time period. Developers’ margins on newly built homes slumped so this stock could be consumed. There is little in the way of hidden stock of seized homes. In the US market the seized homes are the biggest problem.

The principal rationale for the overall good health of the Canadian real estate sector is debatable, but most of the experts accept it’s based on the stimulus efforts of the last year. In Canada the tax motivation packages do not have an best before date, whilst in the US these are only for a limited time.

People in Canada have seen their RRSP withdrawal limit elevated, home buyers’ and renovation tax credits as well. There are also tax incentives and rebates for energy and upgrading your house and that doesn’t even cover the local incentives. The Canadian property market was in a good situation in relation to the rest of the world, made even better by the dynamic thinking attitude of the Bank of Canada.

All these points are pointing out the bullish pattern of the real estate market. There are a few possible market ‘landmines’ to keep clear of. Scotia Capital experts worry particularly about the Canadian condo area. Newly built apartments are not selling very well and leading to an accumulation of unabsorbed new builds. The Canadian Mortgage and Housing Corporation have published predicted statisics about these apartments and professionals think there is a growing pressure for condo prices to drop to halt this build up.

Real estate investors should continue to regard the Canadian property market as a brilliant investment. But it is important to lookout for the indicators closely, particularly in the condo sector. Whether the property market continues in an upward trend or starts spiralling down depends on the federal government. The ramifications of all these property incentives are not going to go on unendingly. Shifting of the subsequent demand to the present over time can cause a severe jump in listings later. Therefore these policies should be removed thoughtfully and gently.