Tight supply conditions in the Vancouver and Toronto real estate markets will play a central role in sustaining national home price growth rates in 2017, forecaster Oxford Economics said in its latest study.
“Our forecast is based on a gradual deceleration in speculative and foreign buying activity alongside continued support to prices from non-speculative demand and ongoing supply constraints,” the global advisory firm stated in its report released last week, as quoted by the Financial Post
Since 2014, home prices have swelled by an estimated 50 per cent in Vancouver, and by around 35 per cent in the GTA.
Oxford Economics noted that national house price inflation will settle to around 6 per cent this year from 10 per cent in 2016. The figure will still run higher than initial expectations, taking into account recent federal regulatory changes.
However, the report warned that Canadian consumers and industry players should prepare themselves for a noticeable slowdown in sales activity and growth rates in the near future.
“Other factors that will dampen demand include higher mortgage rates, high household indebtedness and more restrictive bank lending,” Oxford Economics said.
2016 saw the introduction of various federal and provincial-level measures intended to moderate runaway home price growth in Canada’s trend-setting markets. Aside from the 15 per cent foreign buyers’ tax levied by the B.C. government, far-reaching changes to federal rules governing mortgage qualification were implemented late last year.
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