canada property supply looks at stabilising market
News Posted On: 19 March 2010
Rising supply of Canadian property market looks set to bring some much needed stability to the market which has been showing signs of overheating in the past several months of rapid house price inflation.
"Further expected supply increases will continue to take the steam out of housing markets as the year progresses," said Gregory Klump, chief economist at the Canadian Real Estate Association. "There are still a number of major markets where sales negotiations favour the seller due to a shortage of inventory, but supply has begun rising."
Canada was one of the first property markets to show signs of recovery. These however quickly became fears over a bubble, when it became apparent that the government's stimulatory measures had and were causing somewhat of a liquidity surge similar to those seen mostly in Asia.
This happened because the Canadian banking system was nowhere near as exposed to the international mortgage securities as say, Iceland for example, and because the economy not as reliant on the banking sector. Thus, when the banks lowered interest rates, and started laying on incentives to buy homes, it was nigh on inevitable that sales of Canadian property would increase massively.
This has caused much greater confidence in the market, and that is why supply has started to increase now. The increase in supply is much needed according to those who are in fear that a bubble is forming, because the Canadian government is unable to increase interest because it has pledged not to.
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