The Canadian housing market will grow at a much slower pace compared to the surge seen in the past decade. Home resales are expected to grow by 0.9 per cent this year and remain unchanged in 2012, while home prices will increase by 4.4 per cent this year and 0.4 per cent in 2012.
Garth Turner will have you believe that the federal government’s policy to allow 40 year amortized mortgages with no money down was the root cause in the recent market instability and skyrocketing pricing, but other economists look at a few more contributing factors to paint a broader picture.
These factors include a global recession and domestic policy changes — such as a sharp drop in interest rates, three rounds of mortgage rule changes and the introduction of the HST in Ontario and British Columbia.
The view by many is that less turbulent economic and policy environments will support a smoother process going forward.
Interest rates will remain low well into next year but the growth rate will continue to slow. We will see a steady increase in prices, just not escalating at the pace we have seen in the past few years.
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