Canada’s condo market set to grow
A new study conducted by mortgage insurance providers Genworth Canada found that condo resale prices are set to rise next year in seven of the eight metropolitan cities the report looked at, which included Quebec City, Montreal, Ottawa, Toronto, Calgary, Edmonton, Vancouver and Victoria.
It covered only apartment style condos in each city, except in Quebec where all styles of condos were included.
The findings showed that prices in Edmonton will rise the most, by 3.2 per cent. In Toronto a 2.5 per cent rise is expected, making the average condo $312,352, and a 1.8 per cent increase is predicted in Ottawa, bringing the average price to 283,606 after the city saw a much larger gain in 2012.
The only city who will see a drop in price is Vancouver, where a 2.0 per cent drop will bring prices down to $348,152.
The report comes as a surprise as economists and officials have been warning that the condo market is reaching levels where the bubble could soon burst.
Both the Bank of Canada and federal Finance Minister Jim Flaherty have warned Canadians not to borrow too much when it comes to real estate, as household debt is the number one threat to Canada’s economy.
The bank has also noted that certain housing markets – Toronto in particular – have a persistent oversupply and could suffer from price correction.
The demand increase comes from first time buyers looking for starter homes as well as empty nesters and retirees downsizing into condos. Low interest rates and higher employment will also support the housing market.
The population is expected to grow in all eight cities looked at. In fact, Canadians have been moving to urban centers in record numbers, with Toronto’s population up a whopping 17 per cent over the previous census period in 2006.
“This data corroborates our view that the demand for condos in Canada, particularly at the price-point we insure, is well supported by our economy and our population. For those seeking to own a home affordably in urban centres, condos remain a good option,” Brian Hurley, chairman and CEO of Genworth Canada told The Star.
Sources: National Post, The Star, Ottawa Citizen