Analysts warn house prices can’t keep climbing
Experts have reiterated that the continued heat in the housing market is unsustainable. Figures released by the Canadian Real Estate Association yesterday show a monthly increase of 0.7 per cent nationwide to 41,949 units. The annual increase was 7 per cent. In Vancouver sales were up 1.3 per cent; Toronto gained 0.9 per cent; and Calgary increased 2.5 per cent. Average house prices were up by 7.1 per cent last month to $419,699. Economist Robert Kavcic of BMO noted that the growth is still only really about Toronto, Vancouver and Calgary and elsewhere the decline is already here. Diana Petramala of TD says affordability will mean a decrease in new mortgages over the next year but still believes we won’t see any major changes until interest rates edge higher. Read the full story.
Canadians are less optimistic on house prices
The weekly Bloomberg Nanos Canadian Confidence Index shows that Canadian householders are as cautious as the experts about rising house prices. The index includes a monitor of sentiment on real estate and the latest survey, carried out last week, reveals that the gap between optimists and pessimists was at its narrowest since April with 37.2 per cent believing prices will rise in the next 6 months (down from 37.5 a week earlier) while those expecting a decline was up to 11.2 per cent (from 10.8). The overall confidence of those polled was higher with a positive outlook for job security offsetting losses on the real estate index.
Rental crisis in BC
A lack of affordable rental property in British Columbia is at crisis levels according to BC Non-Profit Housing Association. Its research reveals that almost half of renters in BC are paying more than 30 per cent of their gross income in rent; 30 per cent is considered to be an acceptable maximum. Almost a quarter are paying more than half of their income on rent. There are 517,430 renters in BC and a quarter of them earn less than $19,500 a year. The housing association has launched a new interactive map that gives information on affordability of rentals. Read the full story.
Ontario revenues fall forcing the use of reserves
With a $12.5 billion deficit Ontario’s government could have done with some good news, but instead the province’s fall economic update showed a $500 million black hole in revenues and slower growth ahead. In revealing the figures Finance Minister Charles Sousa said that the revenue gap would be $300 million once lower federal government interest rates were factored in, but that Ontario would be forced to dip into reserve funds. Growth projections have also been revised down to 1.9 per cent in this fiscal year (from the 2.1 previously forecast) and 2.4 per cent each year through 2017. The government do however still expect to balance the books by 2017.
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