Canada’s Housing Market Set for Soft Landing: Scotiabank
Canada’s cooling housing market has made a soft landing with steady sales and pricing through the fall, reveals a real estate trends report from Scotiabank which anticipates a gradual decrease rather than a U.S.-style housing market crash.
“Canada’s national housing market is shifting toward a more sustainable path, though significant differences in regional conditions continue,” Adrienne Warren, Scotiabank’s senior economist, said in the report.
Housing demand is expected to be soft which could lower sales and home prices, especially in buyers’ markets such as Vancouver or where there is over supply such as the condominium market in Toronto, it added.
“However, with the Canadian economy continuing to post healthy job growth, and sellers proving responsive to the underlying shift in market conditions, a sharp decline in prices nationally is unlikely.”
Nationally, sales in October were down about 10% from strong spring levels, but only slightly below the average pace of the past decade. Home sales in Alberta and Saskatchewan have increased this year, supported by stronger economic and labour market performance; in contrast in B.C., which faces the greatest housing affordability challenges, sales have dropped about 10% this year, the report said.
Another report released Monday by the Canada Mortgage and Housing Corp. said Canadian housing starts fell last month for both single-and multi-family homes, particularly in Ontario and British Columbia. The seasonally adjusted annualized rate of housing starts was 196,125 units in November, down from 203,487 in October and well below the high above 250,000 hit early in the year.
Canada’s housing market has been slowing since the spring after years of red-hot growth that sparked debate about a bubble. The market boomed as historically-low interest rates fuelled purchases, driving up prices and adding to household debt. The high and rising home prices combined with the tightening of mortgage insurance rules in recent years have made houses less affordable, notably for first-time buyers.