People constantly ask me this question is going to go higher than what it is right now ? how is Real Estate Market Growth in Canada is going to be in future and I always answer with some simple economic indication that has a huge impact in Real Estate Market Growth in Canada.
Real Estate Market Growth in Canada
If you’ve been keeping up with Canada’s real estate news, then you know that the market is very hot right now, and there has been a huge growth in home value and development across the country. But as an investor or potential home buyer you’re probably thinking – how far will the real estate market grow? While there’s no 100% certain way of telling how much further the market can go, these are some major factors that will influence the real estate market in Canada this year.
The price of oil
In Canada and several other countries, the oil prices have gone down lower than what’s been seen in decades. This is due to several oil production countries and companies flooding the market and boosting the supply. This has had a negative impact on the energy market in Canada.
According to recent reports, Canada’s oil, mining, and gas industries make up more than 25% of the country’s GDP. And with the price getting so low, may workers in Canada related to the oil production industry have been laid off, as domestic production has plummeted. So while several provinces in Canada have been somewhat shielded from the fallout, other regions like Alberta will be taking a serious hit in the real estate market, unless oil prices rise back up to more moderate levels.
Value of the Canadian dollar
Much like the price of oil, the value of the Canadian dollar has gone down, and is now worth 70 cents to a United States dollar. While it really remains to be seen how much the value of the Canadian dollar will affect the job and real estate markets, it could potentially have a big impact. Again, different regions in Canada will be impacted differently, based on their economy and markets, but it’s important to keep in mind that the value of the nation’s currency could influence the real estate market.
The costs for borrowing
Right now, mortgage rates can’t get much lower than they are right now, which is a plus for homebuyers and investors. Mortgage rates right now are making it more affordable for many Canadians to own a home, and the down payment requirements have only modestly increased, making it a great climate for those interested in buying, particularly just outside of Vancouver, Toronto, and Montreal. According to recent reports, there has been talk of lowering interest rates even further, and this would mean that borrowing money to purchase a home will be affordable, but that doesn’t necessarily mean that real estate prices will be rock bottom either. Homebuyers will need to find middle ground.
Influence from foreign investment
When it comes to foreign investment into Canada’s real estate market, there are upsides and downsides. When foreign investors buy property, it’s often welcomed by Canadian homeowners, as they see an increase in their own property values. But on the flip side, in some cases that investment is making it more difficult for Canadian renters to transition into owning a home, because the price of real estate going up in the market. There are also some people living in cities in Canada that are being forced out, due to the rising cost and home values.
Foreign investment may be needed with the value of the Canadian dollar and oil prices being where they are, but that doesn’t mean that there aren’t downsides. Foreign investment may be the way to keep jobs and the economy moving in Canada during this difficult period.
Regardless of the challenges, the real estate market has been, and likely will continue to be doing well in Canada, and individuals that want to take the plunge and buy a home or an investment property should be taking advantage of the affordable rates and favorable climate of the market.