As we head into the early months of 2017, the housing market in Canada seems more unpredictable than ever before. The market has been predicted to crash for a number of years now and the price of homes in Canada has increased 13.0 percent year-over-year to $558,153 in the fourth quarter of 2016. Overall, the first six months of the year are expected to match the trends observed in the last quarter of 2016.
Sales activity is expected to decline
The national sale of homes is expected to drop by around 3.3% in 2017 according to the Canadian Real Estate Association. The growing unaffordability of Canadian homes is contributing to this forecast and sales are only estimated to rise in isolated locations around the nation. As a result, we can expect prices to decline further as demand levels are expected to be at their lowest in decades.
The Greater Toronto area is expected to remain hot
The GTA is expected to be unaffected by the low forecast compared to the rest of the nation as the demand is pretty high. The luxury market, with foreign investment, is also expected to distort the average price of homes in the metropolitan region. The GTA witnessed a 16.1% year over year spike in prices and the number of available homes in the region has declined, which is expected to further drive up the prices. The GTA is expected to grow faster than Vancouver in 2017 as the average prices in Vancouver have started falling already.
2017 is going to be a hard market for first-time buyers
First-time buyers have been struggling in the last year or so and the problem is only expected to get worse in 2017 due to changes in the mortgage law. In order to be eligible for high mortgage rates, first-time buyers will need to display larger down payments. As a large majority of Canadians would be unable to do this, we can expect to see continued stability in the rent market. The tighter mortgage regulations were introduced to reduce the risk of a future bubble burst, but we will need to adopt a wait and see approach.