Between skyrocketing housing prices and aggressive new regulatory policies at the federal level, the Canadian real estate market has never been more volatile. Excitement and anxiety are reaching levels that Canadians rarely see outside of a hockey game. So if you’re thinking of buying a house, making a shrewd investment, or just being a fountain of wisdom at the next cocktail party, this will get you started on the right foot.
As of January 1, 2018, some stricter mortgage policies went into effect. According to these new federal guidelines, anyone applying for a loan, regardless of the size of their down payment, will be closely scrutinized to ensure that they would be able to make payments, even in an environment of rising interest rates. Furthermore, those with down payments below 20% are required to purchase mortgage insurance, to protect the lending industry from a bursting bubble scenario.
The Trudeau government enacted this new set of rules as a way of slowing down runaway home prices and an impending affordability crisis, particularly in markets like Toronto and Vancouver. For the same reason, the Ontario Providence has also passed a 15% non-resident speculation tax.
Now here is a quick overview of real estate trends in Canada and city by city:
Canada: The Canadian real estate market took a downturn in the beginning of 2018, after remaining strong for so many years, even in the midst of a declining world economy. Experts have attributed this sudden dip to the new rules that went into effect on January 1st. The new policies, in combination with rising interest rates, are expected put a damper on the housing market for some months to come.
Pricing in some parts of Canada remains very strong, as you will see, but other areas are down considerably. Overall, the national economy remains healthy, and Canadian real estate generally continues to be a very safe and sound investment for the long-term.
Average price of properties: $491,065 (down 10.4% from 2017).
Montréal: Montréal is maintaining an optimistic real estate outlook in 2018, not experiencing the same level of slowdown that’s taking place in Vancouver and Toronto. Prices are expected to rise moderately in 2018, and condos are considered to be an especially wise investment at the moment.
Average price of properties: $338,200 (up 6.2% from 2017).
Vancouver: Vancouver’s real estate market has been on fire for several years, but is finally showing signs of cooling off, with a sharp drop in activity. Foreign investment and a robust local economy have been driving the prices sky high, and specialists suggest buying office, apartment and industrial property. But be careful! Vancouver is the second least affordable city for real estate in the world, just behind Hong-Kong (based on the ratio of household income to the average price of properties), and a price correction may be on the horizon.
Average price of properties: $1,084,000 (up 16.1% from 2017).
Toronto: This is historically another real estate hotspot in Canada. But like Vancouver, the market seems to be slowing down, mostly because of the policy changes mentioned above. However, experts predict that prices will recover by the end of the year, as the city continues to attract foreign investment. Keep an eye on property in the rapidly expanding suburbs.
Average price of properties: $760,800 (down 1.5% from 2017).
Ottawa: Strong and steady, the Ottawa market is one to watch. Volatility in Vancouver and Toronto has kept Ottawa out of the spotlight, but if you’re looking for a solid real estate investment, turn to Canada’s capital. Compare prices, and you’ll also find Ottawa far more affordable, with abundant opportunities for first time buyers.
Average price of properties: $376,800 (up 7.7% from 2017).
Calgary: For the fourth consecutive year, home prices are expected to remain flat in Alberta. But Calgary is growing, so real estate in the city continues to be in high demand.
Average price of properties: $430,400 (up 0.3% from 2017).
Are you looking for a property in Canada? Or just trying to get a better picture of the market? Here are some helpful links to keep you well-informed on all the latest developments.
- The Canadian Real Estate Association: a great resource for listings and pricing statistics
- Realtor.ca: a powerful tool to search for property listings
- House Price Index for Canada: for when you really want to crunch the numbers
- Shupilov Real Estate: news, trends and forecasts, specializing in the Montréal market
Photo Credit: Wikipedia