Real estate investors are having their eyes set on Canadian real estate trends, all because of the rising uncertainty. As the country is accompanied by rapid advancements, both technologically and socially, the real estate industry is facing the heat and is finding hard to keep up with the digital transformation.
Talking about the last year, 2018 proved to be extremely taxing for the people. The market was slowed down by correction measures and other interventions, which in turn, decelerated down the entire market considerably.
So, what does the future hold for 2019? Will there be a further slowdown, or a recovery, or will the market experience a plateau? We will find out this and much more in this article.
The Real Estate Market in Canada So Far
Canada’s real estate market was never this crippled as it was in the year 2018, as far we can recall. Whether because of the tighter rules or the increasing prices, the Canadian Real Estate Association found that the home sales activity kneeled down to 12.6% in November.
What’s more, if predictions from CREA are to be believed, home sales will continue to decline and reach the lowest point in nine years in 2019.
Canada Real Estate Trends In 2019
Changing mortgage regulations
The changing mortgage regulations are dominating the real estate market. The housing transactions have experienced a significant slowdown in some of the hottest markets such as Toronto and Ontario in the previous years, and the trend still continues to exist.
This slowdown was the outcome of the new tax rates imposed especially on foreign homebuyers. The restrained housing market of the provinces is mainly driven by the latest mortgage stress tests and other government policies.
The subdued provincial housing market
Taxation rates and other government interventions slowed down the activity in the real estate industry. A strong performance in the economy and favorable demographics are required to boost the home sales throughout the country in 2019.
According to an estimate by Re/Max, the average sales prices in the housing markets is expected to increase by 1.7%. As the market continues to stabilize, the rising prices could stop the homebuyers from finalizing the deal.
Another survey by Re/Max revealed that rising interest rates will make it tough for the Canadians to purchase a home in 2019.
Talking about Toronto, home sales dropped by more than 15% between 2017 and 18.
As per the major banks in Canada, the interest rates for home loans will continue to rise in 2019. The interest rate was raised to 1.5% in July in 2018, and this played a great role in slowing down the market.
Thus, no matter, if you are looking to buy a house in Toronto, or an office space Vancouver, passing the federal mortgage stress test will be tough to qualify to attain a new mortgage because of the rising interest rates.
Growing Canadian economy
Most of the families in the country owe a big housing amount as big as the GDP of the country. However, some reports suggest that the economy of Canada will continue to grow in 2019 even if it is a slow pace compared to the growth in the previous year.
Important Revelations from Re/Max Housing Market Outlook Survey 2019
Some important insights were brought into the daylight by a recent survey conducted by Re/Max. Compared to 48% of Canadians who wanted to purchase a property last year, only 36% are interested in investing in the property in the next 5 years. This big shift could be because of the mortgage stress test and the ever-rising interest rates which is deflecting the people from investing.
What gained our attention was the fact that 31% of the survey respondents believe that the higher interest rates have not interfered with their ability to purchase a home.
It was also found that more than half of Canadians want to live closer to green spaces and nearby their workplace. Although recreational cannabis was legalized in October 2018, 65% seems to be least interested in living nearby a retail Cannabis store.
The Final Words
As is evident, the Canadian real estate market is undergoing a huge transformation. However, it is expected that the market will stabilize as time passes by. It would be interesting to see how things pass by and gain shape in the near future.