Even a pandemic that strikes once in a century is not enough to cool the Canadian housing market, prices nationwide are now expected to end the year higher than they started out.
The median home price in Canada is expected to reach C $ 693,000 ($ 527,000) by the end of the year, a 7% increase from the end of 2019, according to a projection by brokerage firm Royal LePage. The market continues to show strength across the country, with 97% of regions reporting higher home prices in the past three months, the company said.
In Toronto, which UBS says has one ofThe biggest risk of a real estate bubble of any major city in the world, the average price hit C $ 975,980 at the end of September, up 11% from the same period a year earlier.
The resilience of the Canadian housing market is not unique: house prices in many parts of the developed world have beendefying the gloom of the Covid-19 recession. Buyers, able to borrow money at historically low rates, turned to suburbs and small towns in search of more space, which drove prices up.
Yet with high levels of debt and a strongWith the number of new immigrants slowing, the Canadian real estate market stands out as being vulnerable, with prices far above what many workers can afford.
“Prices are currently increasing at an uncomfortable rate,” said Phil Soper, president ofRoyal LePage, adding that growth will slow this winter after the post-lockdown summer boom. “Right now, the economy and social data in Canada are not booming.”
A sign that the pandemic may be starting to change the behavior of homebuyers, the largest price increases in Canada were not seen in Toronto, but in suburban cities including Oshawa, Hamilton and Mississauga, and in smaller towns like Windsor, Ontario, across the border. Detroit. Windsor experienced the strongest average price appreciation in the country in the past three months, at 17%.
Toronto’s condominium market lags behind other housing types in the city, with prices appreciating 4.9% between July and September. New data released last week showed a 215%increase in the number of condos listed in the downtown area of the city at the end of September, a sign that absolute price cuts could be underway in some pockets.
“The whole housing system seems to be splitting in two, and this is where the risks start to appear,” saidAled ab Iorwerth, Deputy Chief EconomistCanada Mortgage and Housing Corporation, the country’s national housing agency. CMHC made one of the most bearish market forecasts in May when it announced that prices could drop between 9% and 18% this year.
While prices have moved in the opposite direction instead, ab Iorwerth points to falling rents, the growing preference for suburbs over downtown locations, and prolonged economic weakness as causes of the potential weakness in the condominium market in in particular, which could end up lowering the value of other homes. also.
“All of this suggests that there will be pressure on condo prices, and it can push down other prices for single-family homes or other types of housing,” he said. “So there is a fragility there now.