It goes beyond doubt that the Canadian real estate market has contributed immensely towards Canada’s economy growth over the years but things are about to take a turn as the immense part played by the housing market is about to dwindle.
Home sales are not going to be a big hit this year in comparison to last year which saw a massive amount of sales which boosted the Canadian economy. Home sales in 2016 were very inconsistent as home prices varied and worst of it were well out of reach for many residents.
According to the figures released by the Canadian Real Estate Association on Monday, homes sales began to recover in December after the new mortgage rules and the tax on foreign buyers made by the government influenced home sales to decrease in the previous month. Home sales in December increased by 2.2% and looking at records, home sales in October and December were at their lowest in the past four years now.
The new laws made by the government cut down on the involvement of foreign buyers and the mortgage rules meant that first time buyers would now have to save up more money to be able to make a down payment or alter their choice of house to a smaller one.
But although these new laws are in some ways affecting home sales, the greater reason for the decline in sales is the shortage in home supply.
Efforts have been made to address the high housing prices and also look into the reason why there are high demands for homes but there is yet to be plans to make available more homes in the market. And with limited amounts of homes listed in the market, there will continue to be a problem in home sales and also on the demand side.
In over 60 years, the Canadian economy is now experiencing a reduction in its growth rate and the contributing factor towards this decline is the decrease in the contribution made by the housing sector.
The real estate sector contributes 20% towards the economy growth but this figure will most likely be lowered in this year. The Metro Vancouver housing market has been a leading contributor in the housing market but with home prices about to stabilize, it will no longer be able to make much improvement on the economy.
Home prices in 2016 became the major concern for the housing sector but this year, it seems home listing will become the most relevant issue to be faced by the real estate industry. Experts and onlookers are having their fingers crossed that it will not have any great effect like the home prices.