Situation is going to be changed
The first decade of the third millennium we have witnessed the strongest property market in 50 years. However, Adrienne Warren from Scotia Capital believes the situation is going to be changed.
As a Vancouver real estate agent I can confirm years 2000-2009 were fruitful, when it comes to real estate. Average annual price growth in Canada was 5.2%, highest average appreciation in the last 50 years. Housing starts reached 201,000 units annually, highest number since 1970s. Homeownership rate reached 68.4% in 2006 (latest data we can get), this rate is higher than ever and as new data will be coming for the years 2007-2009, there will be even bigger jump.
In these months, we are once again witnessing strong growth on markets all around Canada. However, the situation in 2010 is not the same as in 2000.
- Home prices are perceived to be over normal level. In 2000 it was quite the opposite ? most experts believed the market is heavily underpriced.
- Large number of new housing starts caused the market is overstocked. Back in 2000 it was underbuilt.
- Economic and demographic factors expectations are below the 2000 trend. Our medium term growth is expected to keep around 2.5%, while the real growth in years 2000-2007 was 3% annually.
- Mortgage market was substantially restructured in the past 10 years ? longer amortization periods, lower downpayments?It's probable that this more flexible regulations will remain, however, we can't ignore the financial crisis and higher cautiousness of lender, who suddenly care much more about credit risks.
Canadian real estate will remain of of the main movers of our economy; however we shouldn't expect the 2000s trend to continue with undiminished strength. ?