This article appeared on the Vancouver Sun’s Website on December 20th, 2011 and was written by Tracy Sherlock.
Canada’s real estate market is strong compared to its global counterparts, but the boom has lasted longer than in most other countries and shows signs of waning, a Scotiabank report said.
“The Canadian housing market remains an outperformer among advanced nations, with real home prices up 4.8 per cent year over year in [the third quarter],” Scotiabank’s Global Real Estate Trends report said. “While the sector’s continued buoyancy is impressive, monthly data through November suggest prices have levelled off since the spring, with conditions in the majority of local markets in ‘balanced’ territory.”
The report credits “ultralow” interest rates with continuing to attract buyers, while economic uncertainty and some recent slowing in hiring are possible dampers on demand in Canada. Canada is at the top of the 10 countries included in the report. Five countries — the U.S., the U.K., Ireland, Spain and (to a lesser extent) Italy — show average house prices significantly lower than their peak values, while the other five countries — Canada, Australia, France, Sweden and Switzerland — still show average prices at or near record highs.
The cycle of rising real home prices is long, lasting on average 12 years, according to the Scotiabank report.
“Italy’s boom was the shortest at eight years, while Ireland and Sweden count 15 years. Canada’s ongoing housing boom is in its 13th year,” the report states.
Canada’s house prices did not rise as steeply as those in other countries, with inflation-adjusted average home prices up 85 per cent since 1998, according to the report.
“Canada’s residential real estate boom started several years later than many of its counterparts, with the economy still feeling the effects of the deep recession of the early 1990s and weak labour markets through mid-decade,” the report says.