Apologies in advance and all round for producing another article about property in Canada just a day after our report on the transparency and fundamental strength of the nation’s real estate market, but there were five other salient points that really needed to be made. These are five reasons why the experts believe Canada’s property market won’t crash.
Far be it from us to guess the market, but we felt that these expert opinions on the state of Canada’s property market were actually very valid and certainly worth sharing with anyone contemplating an investment purchase or perhaps a relocation to Canada.
Yesterday we discussed the basic fundamentals supporting the economy as a whole in Canada, whilst shedding some light on the impact the global economic fallout is still having on the country. Today we need to add that there are many people who are convinced that the housing market is now stagnating or perhaps just stable, having reached a price ceiling beyond which the recent record gains cannot stretch – at least for the foreseeable future.
The expert opinions we’re about to cite don’t deny this fact, but what they vehemently counter is any doomsayer talking the market down to the point at which it will go bust and crash.
Opinion One – The IMF recently placed Canada at the very bottom of an international list looking at nations where home prices have been overvalued. In other words, the International Monetary Fund does not believe that Canada’s market has been over hyped, over sold, over blown or even overpriced – meaning that the country’s property market is far less likely to crash because prices are not over valued.
Opinion Two – Canada’s construction companies have not been able to, nor have they attempted to over build. Construction restrictions exist across the country in all major towns and cities, what’s more, Canada’s constructors have proved themselves to be a cautious bunch over the past decade and they have not over built. This means that, unlike in Spain for example, there is not a case of over development in Canada with tonnes of unsold property stock bringing down the market.
Opinion Three – According to Scotia Bank: “mortgage carrying costs as a share of disposable incomes are historically low, despite rising home prices.” This means that the majority of Canadians are in the position that they can comfortably afford the cost of their property, thus reducing the risk of what occurred in American occurring in Canada. People are less likely to default, be foreclosed upon and find themselves homeless, banks are less likely to suffer the fiscal fallout from such a situation, and therefore the housing market is far more safe and stable as a result.
Opinion Four – Canadian lenders never attempted to lend to the subprime market in such high and disastrous volumes as their American counterparts, therefore Canada’s mortgage market quality is sound, robust and not affected by the so called credit crunch. This means that unlike in the UK for example, where lenders are in such a tight squeeze that they are barely lending to anyone nowadays, Canada’s lenders are as secure and operating as conservatively yet securely as before. So, if one requires a mortgage in Canada and one is not subprime but somewhere between there and A grade, one is far more likely to get a loan…meaning there is affordability in the market which keeps it liquid and prevents it from crashing.
Opinion Five – One does not associate speculative home buying with Canada, what’s more, Canada is not considered a nation where investors flood the market attempting to make a quick turn around on real estate. Again according to Scotia Bank: “real price trends remain largely consistent with short-term supply-demand dynamics” – in other words, Canada’s is and long has been a market where demand for property drives price increases. As demand exists across the nation from the natural ebb and flow of the property tide, from professional migration and inward expatriate migration, so there is life in the real estate market in Canada.
As we have hopefully demonstrated, Canada’s is as healthy a property market as you will currently find. It is build upon strong foundations and there are many experts whose collective opinions all point to a situation where Canada is immune from a crash. We wouldn’t go so far as to say a crash will never happen – but property in Canada certainly looks healthier than property in the UK or the US at the current time anyway!