Stuart Levings, head of the country’s largest private mortgage insurer, told American investors that the Canadian market had solid underpinnings, with Vancouver prices soaring 9.4% in May from a year ago and the average price of a detached home reaching a record $1,417,409; Toronto’s average price rose an average 11% for that month YOY to $649,599.
But following the recent report stating that national real GDP growth is expected to fall to 1.5% on the heels of 2.4% growth from last year, Levings had this to say this week about the state of the industry.
“The report findings continue to align with what we have described as a soft landing for Canada's condo market for 2015,” said Levings. “While conditions vary across markets, with greater cooling in oil-exposed regions, overall, the numbers point towards balanced resale activity which will support the safety and soundness of the condo market.”
The Conference Board of Canada condo report, released by Genworth
Canada, shows slowing GDP and job growth will have a moderating effect on Canada's condo market, easing fears of overheating markets and further reinforcing the prospects of a soft landing, even as regional markets vary widely due to differing economic conditions.
“Rapid increases in headline house prices have largely been driven by single- and semi-detached homes and row units in Toronto and Vancouver,” said Robin Wiebe, senior economist at the Centre for Municipal Studies at The Conference Board of Canada. “Price increases for apartments have been much less frothy. Accordingly, nowhere do we see significant overvaluation of condo prices.”
The report is a vindication for Levings, who had disagreed with what the International Monetary Fund and the Bank of Canada were saying back in June about the Canadian housing market – those two bodies labelling the Canadian market as “overvalued.”
At the time, Levings argued that the demand from millennials and some 250,000 immigrants was more than maintaining the first-time homebuyer demand, which in turn has those selling to buy another home.