Canada: The Housing Market

The Canadian housing market looks positive according to an blurb in the Scotia Capital. They are curious: Why is the Canadian real estate sector head and shoulders above other global real estate markets? Is the future more for a bullish or a bearish trend?

Good circumstances in the Canadian market are indicated by several factors. A big increase in listings stock from the spring was removed within a very short time span. It goes hand in hand with the stock of unabsorbed newly constructed houses, which dropped mainly due to the assured reductions in developers’ margins. Foreclosure is now lower than ever so there is little stock of these seized houses. The by far the greatest headache in the US market is the hidden stock of foreclosed houses.

Although the answers behind the health of the real estate market is in dispute, it is accepted that the incentives given to buyers over the last year have helped it. In Canada the tax incentive packages do not have an completion date, whilst in the US these are only for a restricted time.

There are numerous local and countrywide tax incentives and rebates on offer to Canadians. From first time home owners, home renovator’s those who want a more energy efficient home there is an incentive for all. The Canadian property market was in a good situation in comparison to the rest of the world, made even better by the assertive thinking attitude of the Bank of Canada.

The upward trend of the property market are what are displayed with these points. Even though the setting looks good, as with anything there is always some things to keep clear of. Scotia Capital experts worry especially about the Canadian condo area. The catalogue of unabsorbed newly built condominiums is slowly building up (they account for about 13% of annualized property construction activity) and is not just caused by a seasonal trend in the construction industry. Some advisors are not very comfortable with CMHC estimated stats for unabsorbed condos and believe there may be rising pressure for a price drop in the condo sector.

Real estate investors should continue to look at the Canadian property market as a great investment. Investors still need to keep an eye on the market indicators closely especially in the condominium sector. Another question about the bullish or bearish prospects comes for the federal government. It would be too trusting to think that that the results of the property motivation inducements will last forever. Shifting of the later demand to the present over time can cause a severe jump in listings later. Withdrawing the incentives in one fatal blow could have a catastrophic effect.