Homes sales in Canada have held up stronger than most analysts expected over this past year. The price of Canadian homes in the 2nd half of 2015, has at this time, become one of the highest in the world.
A recent Scotia Bank global property trends report ( http://www.gbm.scotiabank.com/English/bns_econ/retrends.pdf ) states that Canada’s home price rise for the past several years is considered the highest valued market globally; although Canada’s 8.3% rise did lag behind recent super-hot markets such as Ireland’s 13.3% rise or Sweden’s 10.2%, but was well ahead of the US’s 5.3% and the UK’s 5.5% increases.
This has been during a time that the depressed Canadian dollar created more international demand for maple real estate. Foreign exchange considerations are increasing the attractiveness of properties in countries whose currencies have weakened relative to stronger currency markets in the US and the UK. But that is not the only factor that is driving up prices.
According to the report, it is not so much foreign buyers who are driving up prices, but mostly Canadian citizens; especially those who are searching through a limited supply of single family homes.
Canadian housing demand has defied general weakness in the economy, in part because of low interest rates, but the market is very uneven from city to city.
Overall sales data points out that it is primarily the hot Toronto & Vancouver and markets which have been driving up prices. This is likely due to people wanting to live closer to where the jobs are, as most people don’t want to take on long commutes.
A weakening Canadian currency is not only making Canadian housing popular, but also similarly in Australia which has seen a steady increase of housing prices this past year, especially in the big urban areas such as Melbourne & Sydney; paralleling Toronto & Vancouver.
Sydney now has also developed a similar affordability crisis that Vancouver is experiencing; with the median home price over $1 million (AUS).
Will there be a ‘correction’ in 2016? That is difficult to project. A thriving Canadian economy and employment sector can easily keep the market on an upswing. In either case, it is still a great market to thrive in especially as housing demand keeps exceeding supply. As the old adage goes, the best time to strike [it rich] is when the market [the metal] is still hot.