The housing market is not going to crash in Canada, says a report by PwC (PricewaterhouseCoopers) and Urban Land Institute.
If it is not going to crash then that is not good news for the ones who have been waiting at the sideline for last few years. Since the obvious fall is not going to happen in near future – it is good idea to get into the market now.
Canada’s real estate market avoided the worst of the 2008 global financial crisis, and due to steady economic growth and a lack of oversupply it remains in a good position. The current level of economic growth will support the expansion of the real estate market across all property types. The Canadian real estate market could also get a boost from improvement in the U.S. economy.
The report highlights the changing demographics and requirements of Canadian home buyers. Rather than school – buyers are now more interested in transit facilities, indicating the latest trends in urbanization. Generation Y will be leading the next trend of real estate. They will be favouring urban shelters than sub-urban ones.
Stricter mortgage rule has kept a lot of potential buyers at the bay and that in turn encouraged apartment developers to come forward.
Canadians have heavily invested in US real-estate market. Canadians are now the United States’ largest non-domestic real estate investors, with $10.7 billion invested into US properties over the past 12 months – says the report.
Canadian respondents think that the inflation and interest rate will only rise moderately over next five years. According to the RE investors 2013 would be a good time to either sell or hold Canadian Real Estate portfolios. Buying is not as favoured as the other two. That reflects the uncertainty in the investors mind.
Yet there are signs that Canada’s real estate market will reach a plateau in 2014. “Canada is in a holding pattern,” says one portfolio manager. “Going into the downturn, there was very little construction. We were already seeing rents at near-record levels, and seeing vacancy rates at rock-bottom levels. So it is very difficult to see substantial improvement in fundamentals.”
The report details the prospects of various property types as investments. In the residential side single family ranks third preceded by in town housing and seniors housing. Geographically Calgary will remain at the top of the list in 2014.
The report also suggests locking in interest rates as it expects the rates go up when the economy start to show signs of recovery. The report expects no damaging effect of raising interest rate as its dampening effect (of higher rates) will be offset by healthy demands.
Interestingly it identifies Job Growth and Interest Rates as two most important issues in 2014’s real estate dynamics.
Surprisingly federal meddling with financial regulations and European economic crisis are not seen as pressing issues.