A very positive look at the Canadian real estate market appeared in a recent article from Scotia Capital. They are wondering: Why is the Canadian real estate area head and shoulders above other global real estate markets? Are we seeing the Canadian real estate market rising and what is the potential of this rise?
There are a few reasons that are helping the market in Canada. Although there was a big rise in listings at the early part of the year, these went very quickly. Reductions in developers’ margins on properties supported the stock of newly built homes lower. There is little in the way of hidden stock of seized properties. The by far the largest issue in the US market is the hidden stock of foreclosed properties.
Although the answers behind the health of the property market is in dispute, it is believed that the inducements given to buyers over the last year have bolstered it. In Canada the tax incentive packages do not have an best before date, whilst in the US these are only for a restricted time.
We are talking about RRSP removal limit increase, first-time home buyers’ tax credit, home renovation tax credit or energy and home retrofit tax incentives and rebates, not to mention local stimulus. Examining the Canadian real estate market against the rest of the world, Canada has always held its own. The Bank of Canada with its strong dynamic outlook has made it a front runner.
All these points are implying the bullish pattern of the real estate market. Even though the stage looks great, as with anything there is always some things to keep clear of. The condo market in Canada is a cause for concern Scotial Capital experts are saying. Thirteen per cent of real estate construction is condo builds. This market for some reason is not selling as well forging a build up of unsold apartments. To stop the unabsorbed condo levels skyrocketing experts believe that there could be rising pressure for prices to drop after observing a report by the CMHC.
Real estate investors should continue to look at the Canadian real estate market as a brilliant investment. The condominium market is an area that investors need to watch closely. Whether the real estate market continues in an upward flow or starts spiralling down depends on the federal government. The results of all these real estate incentives are not going to go on forever. Trying to get everyone to take up these inducements now could lead to a bad situation with listings at a later date. As a result these policies should be removed carefully and gently.
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