Commercial lenders haven’t been this pessimistic about the future since 2009, according to the latest numbers released by The Real Property Association and FPL Advisory Group.
"Canada's real estate industry has been on a tremendous run since 2009 and the question we keep hearing is how long will it last?" said Carolyn Lane, the vice-president of membership, marketing and communications of REALpac. "Our members are keeping a close watch on interest rates, economic growth here and in the U.S., and also debating whether asset prices can keep rising."
According to the Canadian Real Estate Sentiment Survey – which canvassed some 41 participants for this quarter – executive sentiment fell to its lowest level since 2009 due to concerns about the state of the Canadian economy and the sustainability of current asset pricing.
The survey's mixed findings were echoed by respondent comments such as:
"In Canada, property markets are very stable but the economy itself isn't great. I've felt since mid-last year that Canada is sort of flat. It worries me going forward."
"Canadian fundamentals are quite good with demand and supply in balance. Development is ramping up, and access to debt and equity has never been better or cheaper; this continues to push rates down and prices up."
"The market, I believe, is just not sustainable. There may be a slight correction or slow down. The rates and terms are excellent; I just don't know how that's going to last."
"Real estate investment opportunities in many parts of the United States continue to become a more compelling part of the opportunity landscape. Talent and capital will pursue those opportunities, to an extent, while the Canadian markets cool in response to a weaker economic climate, concerns over eventual higher interest rates, and the sustainability of currently low cap rates."