Royal LePage Report: Markets Look Hot Through 2016
Royal LePage released a report today stating that Canada’s residential real estate market posts strongest growth in five years in the second quarter of 2016. Also, Central bankers expected to keep interest rates lower for longer in light of Brexit and global uncertainty.
The Royal LePage National House Price Composite shows home prices in Canada increased 9.2% year-over-year to $520,223 in the second quarter of 2016. They forecasts that the aggregate price of a home in Canada will increase 12.4% when compared with end of 2015.
“Economic and social disruptions have rocked the world…making it very likely that the Bank of Canada will leave interest rates as-is for now.” said Phil Soper, president and chief executive officer, Royal LePage.
Brexit uncertaintly which could last up to two years will keep bankers lowering rates for longer. “Some have suggested that Britain’s exit from the E.U. will drive more foreign money into the relative safety of Canada’s real estate markets,” said Soper. “We anticipate the impact, if any, will be seen in the commercial property sector and not in housing markets. Beyond Europe, our research does point to increasing Vancouver and Toronto region foreign buyer activity in residential markets this quarter. Canada remains a favoured nation for the world’s real estate investors.”
“At Royal LePage, we see residential real estate as a long-term investment supporting family life. A home is ill-suited as a buy-and-flip investment. People that engage in this kind of activity are inevitably burned when a market slows and the time it takes to sell the property increases substantially. We applaud the efforts of all levels of government to better understand Canada’s housing market, through a coordinated effort to gather and analyze real estate data. Still, we remain convinced that heavy-handed use of tax policy in an effort to artificially influence asset values in an open-market economy like ours is fraught with peril, particularly in a cyclical industry like housing,” concluded Soper.
Collapsing oil prices and dollar value has seen real estate growth in British Columbia, Ontario, Manitoba and Quebec, the provinces tied to goods and services export and the U.S. economy. With employment growth at twice the national average, Ontario is expected to be one of the fastest growing provinces.Very strong employment growth in the US in June will also stimulate the export sector. The GTA saw notable year-over-year home price growth of 10.2% to a median price of $656,365, while Toronto rose 8.4% to $680,096.
“Southern Ontario continues to see substantial year-over-year home price appreciation, with robust sales activity and price growth in both Toronto proper and in the region’s other urban centres, with no immediate sign of slowing down,” said Soper. “It is completely fair to describe the price increases we have experienced in the Toronto market as healthy; Vancouver is a different story altogether. Canada’s most expensive market is distancing itself from the rest of the country at such a rapid rate that housing affordability has become a major public policy issue.”
Click here to read the full report.