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Wednesday, 12 December 2012 05:16

Scotiabank: Market achieved soft landing

Written by  Jemima Codrington
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Canada’s housing market has dodged a correction bullet, according to a new report released by Scotiabank yesterday.

Economist Adrienne Warren says the market has reached “a soft landing”, crediting the tightened lending rules for slowing sales and steadying prices.

“The latest round of regulatory changes that took effect in early July, including the lowering of the maximum amortization period from 30 to 25 years, has contributed to the softening but does not appear to have sharply accelerated the decline,” says Warren. “Meanwhile, anecdotal reports point to a lower level of investor and/or foreign demand.”

The report indicated that between the spring and fall, sales were down 10 per cent. Prime markets such as Vancouver and Toronto were down from the year prior, something that isn’t likely to change soon, according to Warren.

“This could put some further downward pressure on sales volumes as well as prices, especially in markets that have already shifted into buyers’ territory or in certain market segments that are potentially oversupplied. However, with the Canadian economy continuing to post healthy job growth and sellers proving responsive to the underlying shift in market conditions, a sharp decline in prices nationally is unlikely.”

The report placed Canada in a positive light when looking at global markets, including stabilizing markets in the U.S, U.K, Australia and China.

Last modified on Wednesday, 12 December 2012 17:46

1 comment

  • Vinod Sharma Thursday, 13 December 2012 23:06 posted by Vinod Sharma

    I guess it was needed though it has hurt the market sentiments. In certain cases lending was tightened so aggressively that the appraisers came up with a market price for a brand new Daniel condo lower than the purchase price.
    My own thought is that 2013 will see markets back to normal in terms of volume and "stabilised prices.

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