Cooling of Canada’s real-estate market expected to continue
Canada’s real estate market is expected to slow further, with rising interest rates and more stringent mortgage rules set to cool home sales and price rises. Among once-hot markets, the outlook for Toronto home prices improved somewhat from the previous poll in June, while the prospects for Vancouver, which has some of the most expensive homes in the world, grew more precarious. national house prices will rise by a median 1.7 per cent this year, slower than the 1.9 per cent in a poll taken in June. That is below the expected rate of consumer price inflation this year and in 2019. House prices are set to rise another 2.1 per cent next year, in line with the June forecast, and another 2 per cent in 2020, down from the prior forecast of 2.5 per cent. “We are going to see very modest price growth across all markets,” said Robert Kavcic, senior economist at BMO Capital Markets in Toronto. “We are seeing Toronto and Vancouver still adjusting to past policy measures and Bank of Canada rate hikes.” New rules implemented at the start of this year requiring so-called “stress tests” for borrowers have restrained home sales and prices, despite an otherwise solid economic performance. Regulators are trying to ensure a soft landing for a market that was propelled by years of low interest rates following the global financial crash and ignited fears that housing in Toronto and Vancouver is in an asset price bubble.
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