The Canadian housing market maybe slowing, but it isn't facing a meltdown such as the one in the U.S., according to PricewaterhouseCoopers (PwC). Over the past several years, banks and regulators have kept a close eye on mortgage lending practices, which has resulted in Canada not being affected at the same level as the U.S. by the sub-prime mortgage crisis.
"U.S. housing woes haven't extended to Canada," said PwC partner Frank Magliocco in a recent press release. "Property markets, including housing, track at or near equilibrium with high occupancies and controlled development. We always get caught up in U.S. trends, but given our strong fundamentals they shouldn't affect us to the same magnitude."
General Canadian property trends
Mortgage rates are beginning to rise, according to the fourth quarter report recently released by Canada Mortgage and Housing Corporation. However, they are still low in the historical context and are expected to remain as such.
Canadians are presently employed in record numbers, with 194,000 hirings in the first quarter of this year alone. The growing demand for qualified employees is expected to drive up individual salaries which will in turn increase demand for housing.
Net migration, defined as the number of people who immigrate into Canada minus those who leave the country, is also expected to increase by 9.2 percent. This adds some 261,000 people to the rolls in 2008 and is expected to put upward pressure on housing demand. In addition, net migration numbers are expected to remain approximately the same in 2009. However, an aging population and declining birthrate will continue to temper demand in the residential sector in the medium and longer term.
The Canadian housing market
Compared to last year's record breaking peak, real estate transactions in major markets across Canada are low, according to Housing Market Outlook 2009, a recent ReMax report. Approximately 440,000 residential properties were bought and sold in 2008, down 15 percent from the year before.
Of course, how well the housing market does in 2009 depends on how well the economy performs. Like most other markets, the Canadian housing sector is affected by the credit crunch, the unstable stock market and the global economic recession. However, if confidence is restored to investors and they are encouraged by low interest rates, the residential market could recover by the spring of 2009.