Global Housing Slowdown
As observed over the past year and this year, the real estate prices shot up in several advanced economies, which is feared to result in a global housing bubble burst if the markets overheat. The high property prices have not been consistent with a stable real estate market.
It is becoming more and more prominent that the housing bubble is ready to burst all over the world. It will cause a major drying up of the real estate market. Governments might have to intervene to regain balance if the circumstances are to follow those of 2007-09 bubble burst.
The pattern of the slowdown can be seen around the world in Knight Frank’s latest Prime Global Cities Index, which tracks the performance of luxury residential properties across key global cities for the period of March 2016 to March 2017. Real estate hot spots like London and its surrounding areas seem to be rapidly cooling down.
Canadian Housing Bubble
Though the Canadian house prices continue to surge, especially when compared to other parts of the world like Russia and Egypt, the Canadian property sales have now started to slowly cool down. Numbers from the Canadian Real Estate Association (CREA) show that the real estate market across the country is substantially weaker compared to the same time last year.
Canadian housing has experienced a much smaller, shorter decrease in prices during the financial crisis as opposed to a much larger, longer rise in prices during the recovery. When you put this together with the unfathomable rise in housing prices and near-record high household debt-to-income ratios, the Canadian housing bubble looks unstable should the tides turn.
Vancouver Real Estate Continues to Thrive
Despite a fall in Canada’s real estate prices and the introduction of a new foreign home buyer’s tax, Vancouver and Toronto show no signs of slowing down. The real estate properties in Vancouver are still expensive and almost unattainable.
This rise seems to step from local investments, especially after a decline in investment from China. Though there is a small decrease in the amount spent on high-end homes, it has not created a substantial effect on the overall Vancouver market.
Vancouver condos have seen an increase of almost 2.2% per month and are likely to increase further. Rentals are going down as landlords are interested in selling the properties while the boom lasts.
The 15% tax on foreign buyers was B.C government’s way to stabilize the increasing property prices. It helped to cool down the heat briefly, but the prices started to increase again after a few months. However, even with the rising prices of properties, Vancouver is becoming an excellent investment city, especially for foreign buyers.
Conclusion
Despite the real estate slowdown across the world, Canada is faring better than most and is trying its best to hold its own. One of the biggest reasons for its stability is the rising housing prices in its major cities like Vancouver and Toronto. They have become attractive investment grounds over the course of 2016-17.