canada property market to face pressures
News Posted On: 23 December 2011
A new report into the Canada housing market from TD Economics has said that the Canadian housing market will face a tug-of-war, pitting low interest rates, against economic uncertainty, slow income, and slow employment growth. According to the report this will leave places like Calgary and Edmonton in the clear, but impose price corrections on places like Toronto and Vancouver -- let's face it they could do with a bit of correcting.
The report shows price growth of 7.5% in 2011, with sales growing 2.2%. However, the growth was mainly down to Vancouver and Toronto, removing their figures left the price growth much more muted.
The firm goes on to predict a 2.4 per cent drop in sales next year and a 3.5 per cent drop in 2013, while prices will suffer average declines of 1.9 per cent in 2012 and 3.6 per cent in 2013, Gulati says.
TD estimates prices are over-valued 10 to 15 per cent, though that is expected to drop over the forecast period.
"Economic, income and employment drivers no longer support the pace of activity and price gains we witnessed in the early phases of the recovery," the report said. "Our current forecast points to a gradual unwinding of over-valuation, but more turbulence in Europe, the U.S., or even here at home, may speed up the period over which the excesses are evaporated."
The report comes at the same time as an IMF warning that the Canadian economy could be heading for trouble. The IMF believes that Canada's high household debt, and over-valued housing will combine with the external economic factors to derail the country's economic recovery.
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Written by Les Calvert+
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