Real estate markets worldwide are witnessing major fluctuations as far as their economies are concerned and this has also impacted global real estate at a highly intrinsic level. It has been positive across some markets while some global markets have been seeing mixed trends. The latter may hold true to some extent for Canada. Now Canadian real estate has been able to shake off fears about a crash or huge slump as were previously speculated upon. It has also done decently in fact, considering the prevailing market conditions and the impact of stringent measures like the stress test for mortgages and growing levels of unaffordability due to sky high property prices.
Yet, there remains steady demand in major Canadian cities as opined by several experts. As per recent reports, homebuyers are now finding Canada more attractive on account of its recent market slowdown. The same holds true for global investors as well. This may eventually lead to higher sales volumes and revival for the realty market as per reports. There is higher scope to enter the market for several buyers throughout Canada where property prices are growing slowly and home prices have actually reduced in B.C.
This equates to something of a buyer’s market, one that may spark higher demand as a result. Experts feel that the market slowdown across Canada has a strongly positive side to it. This is the fall in real estate prices throughout preferred Canadian cities, thereby helping more first-timers buy housing units and enter the market which was otherwise price prohibitive earlier with major concerns relating to affordability. According to reports, Greater Vancouver, for instance, had average weighted pricing (home sales) touching $1,239,306 which indicates de-growth of 1.5% as compared to Q1 2018. The median selling price also came down by 3.3% and 1.6% for bungalows and two-storeyed housing units respectively as per reports. However, median pricing went up by a modest 1.4% (year on year) for condominiums based on reports. Even this is lower than growth in double digits seen around H1 2018 as per industry watchers.
The benchmark home price (composite) as reported by the Real Estate Board of Greater Vancouver or REBGV, was lower by 7.7% to stand at $1,011,200 and detached home prices lowered by roughly 10.5% (year on year) while prices of condo units came down by 5.9% from March 2018 onwards. Experts also discovered that in Greater Victoria, average selling prices for two-storeyed housing units were roughly $923,480 which indicated growth of 6.9% for the first quarter of this year as compared to the same period last year. Benchmark prices for single-family units, however, lowered by only 0.7% ever since March 2018 as per reports.
Reports state average home prices in Canada went up by just 2.7% on a year on year basis for Q1 2019 to stand at $621,575 and this is lower than the usual expectations of anywhere around 5%. This augurs well for homebuyers throughout the country who can now buy homes at more reasonable prices. The median selling price for a two storeyed housing unit in Canada went up by 2.6% to stand at $729,553 in the first quarter of 2019 while bungalow prices went up by 1.1% to touch $513,497 on an average. Condominiums saw prices going up by 5.4% to touch $447,260 as per studies. Experts still feel that 2019 will be on the sluggish side in terms of overall growth since the lingering impact of the correction in the market will be felt from 2018 and economic growth is also slower. This will keep prices from appreciating too much.
Hence, buyers can expect lower prices for quite some time in 2019 and this presents a great opportunity to enter the housing market as opined by industry experts. The market slowdown gives homebuyers the scope to find real estate to their liking without breaking the bank in the biggest Canadian cities. This should benefit first-time buyers the most as per reports. Industry players also forecast an increase in aggregate home prices by only 1% in the spring period for Canada real estate. Prices may in fact come down by 1.4% in Greater Vancouver in the second quarter and similar drops may be seen in other markets as well.
Ottawa is one of the markets forecasted to witness decent growth in prices for the second quarter at around 2.8% and average prices should touch $482,459 in this period. Job opportunities continue to be strong in Canada and employment levels are high which means that several people who are renting will now purchase property in the country. This can lift sales volumes and prop up the market even further as opined by several experts. Additionally, the Canadian real estate sector may get a boost from the First-Time Home Buyer Incentive as declared in the federal budget. This is a three year plan where $1.25 billion will be channelled into the shared equity mortgage blueprint. CHMC (Canadian Housing and Mortgage Corporation) will be a co-investor with first-time buyers for up to 5% of the purchase price for existing homes. Registered retirement savings plan limits for withdrawal were also scaled up as part of the Home Buyers Plan. This went up to $35,000 from $25,000 previously.
$10 billion was also committed for a period of 9 years with a view towards developing rental housing. The new housing initiatives should go a long way towards boosting the realty sector in Canada according to several experts. Ontario remains a strong market due to steady demand. Price appreciation was at satisfactory levels in Ontario and this had a major role to play in national price growth trends. Studies highlight that overall price appreciation in Canada would slump to only 0.4% in case Ontario’s price growth was not taken into account for Q1 2019.
The City of Toronto continues to witness the fastest rate of price appreciation with detached homes seeing price increases in sync with inflation rates although condominiums are witnessing price growth in double digits. Toronto had prices going up by 5.8% (median pricing) for housing units in Q1 2019. Bungalow prices went up by 2.5% and two-storeyed homes had prices increasing by 4.8%. Condominium prices increased by 9.3% on a year on year basis as well. In case of the Greater Toronto Area (GTA), overall aggregate prices of homes increased by around 3.4% in the first quarter of this year.