There has been a lot in the news recently about the possibility of a real estate bubble in the Canadian housing market, with Finance Minister Jim Flaherty warning that Canadians are taking on too much debt and that they could face problems once interest rates begin to rise.
However a report from the Canada Mortgage and Housing Corporation doesn’t think this is the case, and hasn’t found any real evidence for a property bubble, even in Metro Vancouver. Vancouver’s property market has been red hot over recent years, but there’s no denying it’s slowing down right now. There’s been an increase in listings combined with a drop in sales, and according to data from the real estate board of Greater Vancouver, property sales are down by 19% compared to the same period last year.
This might seem a huge decrease, but it’s important to remember these figures are being compared to a time when there was a high point in activity in the real estate market, due to changes in the federal government mortgage insurance criteria. Although sales may be down by 19% prices are up by nearly 4%, but even this figure can be confusing as the numbers can quickly change on a month-to-month basis depending on the number of multimillion dollar houses sold in West Vancouver.
The article in Global BC points out that the Canadian economy is still in pretty good shape, all things considered, and there’s a good supply of homes combined with low interest rates. While the number of sales may be falling, prospective purchasers are warned property prices might not follow suit.