The Canadian real estate sectors continues to see home prices increase partly from low interest rates and also a high demand for homes from buyers and according to reports from Reuters, this situation is motivating policymakers to intervene in the housing market that numerous housing experts are describing as a housing bubble. From the opinion of most economists, Toronto and Vancouver housing markets might go through a sharp housing correction if measures are not taken to bring home prices under control. In 2016, both markets became Canada’s most expensive markets and experts warn the whole Canadian real estate market may see a significant pullback.
There is a growing concern in the housing market despite the fact that the housing market has managed to avoid a housing collapse like the one that occurred in the United States but economist warn that Canadians should not be complacent about the situation. Although the government had implemented several measures in recent years to address the home pricing situation, 13 out of 20 economists suggest that there is a likelihood that the government will introduce additional laws in the months to come. But in the meantime, home prices are expected to increase especially in Toronto. The national home price average is anticipated to increase by a median 4.7%.
According to Sal Guatieri, senior economist at BMO Capital Markets, there are numerous factors that are fueling home prices including both local and foreign factors. Furthermore, an influx of immigrants for other countries and provinces is also a contributing factor to the rising prices.
Quite recently, BMO suggested that Toronto and other nearby markets are currently going through a housing bubble. However other economists and investors also have the same sentiment. Presently, Vancouver and Toronto housing markets are moving in two separate directs. As Vancouver home prices declined in the fourth quarter, home prices in Toronto continue to soar higher regardless of the strict mortgage rules.