In a previous report, it was said that Calgary could expect to sell fewer homes and at lower prices this 2016, with CREB President Cliff Stevenson's reportedly telling reporter that this year is going to surely be a buyer's market. On the other hand, there were experts saying that home prices in Vancouver will continue to rise this year. But the latest news suggest that Canada might have been hit the hardest now that the global boom in commercial real estate is said to be over.
According to Bloomberg, Avison Young reportedly said in a report last Wednesday that the signs after the financial crisis were all leaning toward declining global economy, with the slowdown said to be led by Canada. Chief executive officer of Toronto-based Avison Young Mark E. Rose told Bloomberg over the phone, "We're at a peak. I don't think we're getting any higher. The next step is down -- it has to be."
Moreover, the company is said to have forecasted that oil slump, shrinking tenant demand, debt-burdened consumers and overbuilding are all signs that Canada's economy is slowing down. Specifically, Avison Young's report was geared towards reviewing the on real estate trends for 55 regions across Canada, the U.S. and the U.K. London office. The report suggested that the vacancies might probably increase from 5.8 percent to 6.6 percent, except for U.S. where there will be very little change.
"Will it change pricing? Yes," Rose added. "Whether it happens in the first quarter of '16 or the first quarter of '17, a lot of it has to do with increases in interest rates."
Monetary policy from Canada to Japan has kept interests rates at record lows across the globe that helped drive surge in real estate purchases. While the increase in rates by the Federal Reserve last month indicates increases in other countries, too. This leads to fewer deals as transactions will decrease because of steep prices, according to Rose.