Whilst property market news for the UK continues to be all doom and gloom, there are other first world property markets that have yet to feel the full effects of the global recession you know!
Property in Canada saw growth of around 10% per annum between 2002 and 2007 for example, and whilst property appreciation has slowed and buyers are becoming scarcer because of lack of financing, the market in Canada continues to remain relatively stable with price falls of only around 5% being predicted for 2009.
The falls are being viewed by Scotiabank more as a cyclical downturn relating to the fact that there is currently greater supply of property stock than demand from buyers, rather than the fall being linked to recessionary fears or sub-prime lending problems. What’s more, the current down cycle is predicted to be less severe than other down cycles in the last few decades. Here we provide a review of Canada’s property market conditions for 2009 for prospective buyers, vendors or investors.
Over the last year property sales in Canada have dropped by around 15% and most of the country is starting to feel the slowdown. Calgary, which was until last year one of Canada’s property hotspots, has seen a reduction in sales of 40%, and Alberta has been classed as a real buyers’ market. This is seen as good news for first time buyers and may help to maintain movement in the property market.
Obviously the current climate of property price readjustment is going to mean that there will be some bargains to be had for overseas buyers looking to invest in real estate in Canada, and in such a large country opportunities really do abound. In areas like Saskatoon, for example, there is a huge demand for high-end rental properties, and the area has largely been ignored by developers and property investors, according to the Canadian Mortgage and Housing Corporation.
The property market in Canada has been saved, to date, from the global housing melt down due to a number of factors. Firstly property in Canada has not been substantially overvalued to the same extent as other markets and there has been very little speculative buying by investors, a common factor towards the end of any housing boom which helps to artificially drive prices up (remember the buy to let boom in the UK?).
Another factor that has helped to keep the Canadian property market away from the downward price spirals seen in the US and UK is a lower level of household debt, this has enabled homeowners to maintain mortgage payments in the face of the recession affecting the country. Place this alongside banks which have been operating with responsible criteria for home loans, and economists are now predicting a house price readjustment and future property appreciation at more sustainable levels – all good news for investors in Canada.