With oil dropping to less than $30 per barrel and the Canadian dollar reaching its lowest levels in 15 years, the beleaguered Canadian economy is struggling to achieve stability this year despite the continued dynamism in the country’s real estate markets.
Housing prices will rise by nearly 10 per cent this year, TREB predicted. Surging demand in high-volume locales like the Greater Toronto Area will play a crucial part in this significant increase, the same projections noted.
Analysts point at the continued downturn of Canada’s energy sector as a main driver for real estate trends this year.
“Certain oil producing countries and companies have flooded the market with a surplus of supply, driving down the cost of crude. As a result it's been a downhill slide for the Canadian energy sector that plays a huge role in the national economy,” the Rent Seeker Team wrote in their analysis piece published by The Huffington Post
“When Canadians lose jobs, the real estate market suffers,” the authors added.
Complicating matters is the increasing presence of foreign capital, especially since a weak loonie fosters exchange rates that make domestic markets attractive to international investors.
“For those who own property, increased foreign investment has been welcomed as they have seen their own property value increase. However, for the majority of Canadians who rent, foreign investment means increased real estate prices that were already unaffordable,” the analysts warned.
All of these developments amid a backdrop of historically low mortgage rates, which are stimulating greater transaction volume.
“As long as borrowing money is cheap, real estate prices won't be. For those who are priced out of the housing market, while rents have also risen across the country, it is the only option for many,” Rent Seeker said.