With the eroding affordability of real estate markets in Toronto and Vancouver, brokerage Royal Le Page said Canada's growth will likely slow down this year. Aside from the eroding affordability, the oil price decline in Canada significantly contributes to this slow paced market.
Even the economic turmoil outside of Canada will likely lessen the price gains for residential real estate market. China's recently decelerating economy impacts that of Canada, since China is one of the latter's second largest trading partner.
According to Royal Le Page, a Canadian house now averagely costs 6.5 percent to $500,688 during the last quarter of 2015. This was a significant decline especially compared to the 2014 rate.
The brokerage believes the home buyers might not buy homes in Canada this year or anywhere else. Even the alterations in the mortgage rules might not help increase the people's ability to buy residential real estate. It is because of the low cost of borrowing, even if the demands in residential real estates in Toronto and Canada will remain high.
Vancouver is expected to increase about 9 percent in terms of home prices, while Toronto will rise to a 5.5 percent. Among the other cities, the expected increase is not over 2.5 percent, whereas Calgary will likely fall down by percent and Edmonton at 2 percent.
Unlike 2015, 2016 seems to bring no good vibes for the real estate market. Royal Le Page's real estate brokerage chief executive officer and CEO, Phil Soper, said that despite 2015's early oil shock, they knew that it wouldn't last long. However, the recent economic turmoil in China won't stop anytime soon. Soper further describes the real estate market price growth as "frenetic."
"While most of the country will continue to see house value appreciation in 2016, we expect that the pace of price increases in Greater Vancouver and the Greater Toronto Area - where real estate appreciation has significantly outpaced job and wage growth - will settle to a more sustainable, single-digit price increase trajectory," chimed Soper.
