2013: A Year of Moderation on the Canadian Real Estate Market

March 18, 2013 - According to a recent report by the Scotiabank Economics team, the decrease in activity observed in Canada’s real estate market for the past few months is expected to continue throughout 2013. After years of strong growth, the majority of the country’s residential real estate markets entered a cycle of more moderate activity. Short-term price growth should be much less pronounced, even negative. However, the study’s authors note that a major correction in housing prices in Canada is unlikely given the economic outlook, the stability of the mortgage market, the low percentage of mortgages in arrears, and the country’s historically low interest rates.
In the medium and long term, the so-called fundamental factors will drive up property prices in Canada, but the increases are expected to be smaller than those experienced in the past decade. First, the relatively moderate global economic outlook, coupled with the expected decrease in expenses from the different levels of government and from Canadian consumers, should dampen economic and revenue growth in the coming years. At the same time, an aging population will lead to a decrease in the active workforce which, in turn, will limit the potential for economic growth. Second, interest rates will inevitably increase, making home affordability more difficult, particularly in markets where prices are high.

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Marlene Ofter

Marlene Ofter

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CENTURY 21 Max-Immo
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