Housing markets around the world has been indicating that things are slowing down, however except for Canada.
Canada which is still recording one of the world’s fastest house price growth, but with the introduction of tough new mortgage rules and higher interest rates might lead to this rapid increase ending in the first half of the year.
As stated in a report publish not long ago by the Global Property Guide, its a website for residential real estate investors. In the third quarter of the year 2017, Canada was the world’s fourth fastest property price growth, those ahead of Canada were Iceland, Hong Kong and Macau.
According to the survey by the GPG, the price in most housing markets have either turned negative or slowed down. house prices have started to decline in locations like Beijing, U.K., Singapore and Mexico.
Out of 47 housing markets that were involved in the survey, the GPG noted that 21 recorded lower house prices in the third quarter of the year. That is seen as a big improvement compared to the period of time in the previous year which they recorded just 15.
Up to two-thirds of housing markets that were surveyed indicated slowing pace. It was either slower price growth or lower prices than before. Even New Zealand is showing signs of improvement.
The report also stated that “Canada is in the middle of a house price boom.”
This was before the introduction of the foreign buyers tax for the housing markets of Toronto and Vancouver, and also the fair housing plan in Ontario. All these new rules were meant to slow down house price growth.
Not only house prices were slowing down but detached homes as well. Condos are still indicating strong price growth.
One example includes the report released earlier this week by the Real Estate Board of Greater Vancouver (REBGV). The report stated that the benchmark prices of condos around the metro area rose by 26 per cent in the past year, as for that of detached home prices, it was rather slow and grew 7.9 per cent .
However this month, a new “stress test” for borrowers of traditional mortgages will be implemented this month and it is likely to decrease homebuyers’ purchasing power by about 21 per cent. In addition, the Bank of Canada estimates that the new rule will disqualify about one in 10 prospective homebuyers.
In addition to that, some experts suggest that the Bank of Canada will keeping on increasing interest rates buy they do not know as what pace it will happen.
DBRS a credit rating agency released a report last year, noting that Canadian mortgage borrowers risk “payment shock” in years to come. It has been slowing down but Canadians won’t be surprised when they see mortgage rates going up again in the short term. This will therefore lead to putting pressure on household finances.
Even the Canadian Real Estate Association has made changes to its 2018 Canada housing market forecast, stating that it predicts nationwide home sales to be down by 5.3 per cent in 2018.