Brokers now used to the churn of a busy market, brace yourselves: Price declines in condo-saturated markets like Toronto and Vancouver will cause Canada’s housing boom to stall next year, according to a Reuter’s poll.
The poll, conducted last week, showed house prices are predicted to gain 2 per cent this year and just 0.5% next year, putting a black cloud over economic markets nationwide.
While house prices in Toronto are expected to rise 6.6 per cent this year, after an almost 10 per cent rise in 2011, they will likely fall next year for the first time since 2008.
Vancouver’s market is expected to continue to decline, with an expected 1.6 per cent fall this year and 2.5 per cent in 2013.
The poll, which surveyed Canada’s big banks, independent analysts and international participants, also found housing statistics are expected to retreat through 2012, predicting a fall from 216,000 in the second quarter to 190,000 in the fourth quarter.
The Vancouver and Toronto condo markets, which have seen rapid construction over the past few years, fed by high immigration to both cities, are at risk of saturation.
While Canada’s housing market avoided the sub-prime bust that hit the U.S after the global financial crisis, household debt in this nation is approaching levels last seen in the U.S just before the housing crash.