Monday 9 May 2011

Canada’s housing market on path to land softly but Vancouver bubbling in early 2011


The Canadian housing market is transitioning to a more stable, sustainable path, following more than two years of significant volatility.
Total home resales were essentially flat in March relative to February (up marginally by 0.1% on a seasonally-adjusted basis) and the first-quarter tally showed slowing quarter-over-quarter growth (4.5%) compared to the final three months of 2010 (12.3%).

While the general picture is consistent with our ‘soft landing’ scenario for the market whereby the trend in activity is expected to flatten or decline slightly and price gains to be limited in the next couple of years, one local market — the Greater Vancouver Area — truly stands out in going in the opposite direction.
We assume that the mortgage rule changes that took effect in March (in the case of the shortening in the amortization period) brought forward some sales that would have occurred later in the year and their overall impact on housing demand for the year will be marginally negative.
Prices are projected to show very modest gains this year (rising 0.5%) and next (rising 1.3%), as the market generally remains in balance.

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