2021 has been purported to be rigorous for Canada’s housing market, but professionals believe that the rush for residential real estate will begin to lose momentum as 2021 progresses.
According to the Royal Bank of Canada economist, Robert Hogue, it is likely that the real estate market had its best share in 2020.
Even with the pandemic surging on, The Royal Bank of Canada estimated home resales in Canada increased about 13 percent last year to about 552,300 units, breaking the 2016 record of 539,100. The bank’s economics division also made a forecast of a steady increase in sales to 588,300 units in 2021, as low-interest rates, space-seeking buyers and a high level of household savings keep demand going.
It has been predicted that the surge in the Canadian housing market will eventually give way to a reduction in purchases. The pandemic also poses an added drawback as unforeseen issues owing to COVID-19 will have to be put into consideration.
Also, one of the spokesperson for one of Canada’s most reputable housing agent, stated that their system is not the standard rate of getting an accurate prediction of the housing market as the COVID-19 exond wave persist. In that light, there are various uncertainty in the housing market.
Capital Economics projects house price inflation will increase past 10 percent in the first quarter of 2021 compared to a year earlier, driven by strong demand and low mortgage rates. However, the research firm sees home-price growth slowing to five percent by the end of 2021, and to two percent by the end of 2022.
Since the recession, mortgage rates over the past two years have fallen. This means that the average individual can afford to put down the required 25 percent for a home. Also, house prices have remained at a steady rate only rising about 10 percent over the same period. Combined with people seeking more space due to the pandemic, this shows a positive outlook for the market.
Although these trends are fleeting. Cities such as Halifax and Montreal have readily adapted to the effects of lower mortgage rates and others such as Toronto and Vancouver are battling with other social issues like immigration which are determining factors of the real estate market and investment traffic. Eventually, the housing market will begin to lose its momentum. Low-interest rates and supply will only hold the market for so long.
While monetary aspects hold a chunk of interaction in the housing market, psychological interactions are also a contributing factor. Individuals are motivated to engage in the market when it’s at its most profitable. Likewise, buyers will be reluctant to sell for the exact reason.
The introduction of the vaccine will ultimately affect the nature of the residential housing market, giving the sector a more secure footing. But the effects of a post-vaccine market can only be fully ascertained in 2022.