Cheap oil is not always good especially for the real estate markets that are dependent on oil production. The St. John's condominium buildings and some commercial real estate markets in Canada have already felt the negative effects of declining oil prices in a sense that condo owners and commercial property owners already had to lower their rental prices as vacancy rates fall due to declining oil prices.
Fortunately though, not all markets are taking the negative hit. According to Globe and Mail, Canada's housing market fared quite well at the end of last year despite predictions regarding parts of the country affected by low oil prices. In the housing market, home resale increased by 10 percent from December 2014. Based on the observations recorded by the Canadian Real Estate Association, 506,000 homes have been resold throughout last year, making 2015 the most active year since 2007.
Moreover, average prices of homes for sale rose by 12 percent from 2014, making last year as the strongest year in terms of property prices increases since 2009. In the Greater Toronto area, price soared 9.8 percent as sales increase more than 11 percent. In Vancouver, sales rose higher at an annualized rate of over 33 percent last month, even if prices increase by 11 percent. Bank of Montreal economist Sal Guatieri has remarked, "We have run out of superlatives to describe just how wild the market is in Vancouver."
The overall December figures disguised the growing regional concern. While other markets took a dive as oil prices fell, prices and sales soared in housing markets of Toronto and Vancouver. However, analysts and experts believed that Vancouver and Toronto markets are already overheated and are expected to cool down in 2016 while buyers begin to struggle with rising property prices and tighter mortgage rules.
