Canadian Real Estate Forecast For 2012

Low interest rates and economic job growth have characterised the current Canadian property market, leading toward stabilisation and a greater ability to maintain slow economic growth throughout the economic crisis.

These unique attributes have made the Canadian property market increasingly attractive to overseas investors who have been Injecting money into the Canadian real estate market. This investor attention has created a slow rise in Canadian home prices, as opposed to other countries where the real estate industry has remained stagnant.

Mortgage Market 

While the central bank has failed to hint whether they will increase the current base rate of 1%, people are still concerned by the cost of real estate versus affordability.

Mortgage rates with Ratesupermarket start at 2.75% which has enabled many first time homebuyers to jump on the real estate ladder and enjoy low monthly repayments. With no base rate changes since September 2010 it will be interesting to see how 2012 pans out.

Meanwhile, forecasts by The Canadian Real Estate Association (CREA) estimated that the national home sales for both 2012 and 2013 will remain in sync with the 10 year average for annual activity.

Property in the larger cities are typically more expensive and a closer look into key Canadian cities uncovers further issues.

Snapshot of Vancouver 

During 2005 to 2010, the compound annual growth rate in Greater Vancouver was set at 10% while the 20 year average was 6%. The average price of both single and multifamily homes during 2011 was $796,000, however, the CMHC predicts this average to rise during 2012 to $800,000.

48% of households own their homes in Vancouver compared to 68% nationally.

Trouble in Toronto - Condominium Market Subject to Excess Supply 

Toronto has seen a 9% increase in condo real estate pricing in comparison to 2011. This means people will be increasingly opting to rent. This may sound like good news for property investors who dominate an estimated 25% of the market, however, as more units are listed for sale, price increases are slowing down. It now is only a matter of time before the market begins to adjust accordingly.

Montreal 

The housing marketing in Montreal saw home resells rise up to 6.9% during the fourth quarter of 2011. However, with a record 47,000 jobs having been cut, it is feared that both the housing demand and the conditions of the market may have negative impact.

The good news is: Montreal is Canada’s second metropolis and a strong office rebuild market has meant that it hasn’t been as severely affected by the economic crisis. According to a study conducted by the Altus Group, Montreal is one of Canada’s most predictable markets, offering high returns and more reasonable, stable prices.

Conclusion While there has been an increase in prices throughout Vancouver, Toronto and Montreal, the Canadian property market is forecast to remain stable throughout the rest of the year.

Source: http://www.businessreviewcanada.ca/money_matters/canadian-real-estate-forecast-for-2012

Real estate | Metro Vancouver price growth cooled in 2011: report

Metro Vancouver's 2011 housing market cooled considerably after starting the year with a bang, according to a Real Estate Board of Greater Vancouver report released Wednesday.

"2011 started with very strong demand, especially in [Vancouver's] west side, Richmond and West Vancouver, but then it peaked in June and closed the year with greater balance between sellers' supply and buyers' demand," Greater Vancouver board president Rosario Setticasi said in an interview.

"[Prices] dropped about 1.5 per cent from June to the end of the year. But overall, the benchmark price for all residential properties increased 7.6 per cent for the year."

According to the report, nine municipalities saw double-digit increases in the benchmark price of a single-family detached home over the last 12 months, with the overall price for all residential properties rising to $621,674 between December 2010 and December 2011.

Although comparisons can change considerably on a month-to-month basis, little Port Moody ended the year with the largest increase in the benchmark price for a single detached home, a 34-per-cent rise from December 2010 to December 2011 to $933,000.

At the other end of the scale was Squamish, where the benchmark price for a single family home dropped 7.3 per cent to $458,000 over the same period.

For single detached homes, Metro Vancouver saw prices increase year-over-year by 11.2 per cent to $887,000, while Vancouver's west side rose 20.7 per cent to $1.99 million, West Vancouver, 15.8 per cent to $1.69 million, Richmond, 11 per cent to $1.1 million, and North Vancouver, 13.3 per cent to $978,000. Metro Vancouver apartments rose in price 3.7 per cent to $401,000.

The Greater Vancouver board's report concluded that total sales of all residential properties in 2011 reached 32,390, a 5.9-per-cent increase from the 30,595 sales recorded in 2010, and a 9.2-per-cent decrease from the 35,669 residential sales in 2009. Last year's home sale total was 6.3 per cent below the 10-year average for sales in the region.

Meanwhile, the Fraser Valley's real estate market in 2011 was below the 10-year average in property sales and above average in the number of new listings, according to the Fraser Valley Real Estate Board.

Fraser Valley board president Sukh Sidhu also said that there was a wide variation in pricing. "For example, in my community of Abbotsford, sales of single family homes dropped by almost seven per cent compared to 2010, pushing prices down slightly, while in south Surrey/White Rock sales increased year over year by 45 per cent," resulting in price increases.

The Fraser Valley board processed 15,529 sales in 2011 compared to 14,891 the previous year, while the number of new listings remained about the same - 31,592 in 2011 compared to 31,437 in 2010.

The board said that although 2011 ranks the third slowest year for sales since 2002, it was only 10 per cent less than the 10-year average of 17,210 sales.

In December, the benchmark price of a detached home in the Fraser Valley was $522,998, an increase of 3.3 per cent compared to $506,145 in December 2010.

The trend toward slower price growth is expected to continue in 2012 as more listings temper demand.

"We're expecting much less price growth this year compared to 2011," Robyn Adamache, senior market analyst, Metro Vancouver, Canada Mortgage and Housing Corp., said in an interview.

"We're calling for about a two-to three-per-cent increase in price growth in 2012, close to the rate of inflation."

Tsur Somerville, director, centre for urban economics and real estate, Sauder School of Business at the University of B.C., agreed. "My sense is that flat or little growth [in prices] is likely."

2012 will also be largely influenced by confidence levels in the global economy, and reduced levels of investment from China or Chinese immigrants, he said.

Source: http://www.vancouversun.com/business/Real+estate+Metro+Vancouver+price+growth+cooled+2011+report/5949870/story.html