“In the short term we’re quite confident that prices will hold up,” Shaun Hildebrand, a CMHC senior market analyst for the GTA said at a conference. “They may decline slightly over the next six to nine months, but in an environment where interest rates remain low and the economy’s holding stable, any sort of reductions in price are just going to help to improve affordability and set the stage for a better level of sales towards the end of 2013.”
The analysis echoes those of an increasing number of economists and comes after the near panic that gripped the condo market this summer. While sales have fallen in that segment of the market, since July prices have fallen only a fraction of the 15 per cent to 20 per cent of earlier predictions.
Still, projecting farther into the future is a much more of a guessing game given the high proportion of investors who’ve put deposit s on the nearly 50,000 units under construction.
What exactly they’ll do in the long-term is more uncertain, said Hildebrand, but key to shaping the future market.
Even though we’re seeing all of this supply, all of this building taking place, it’s not necessarily a prescription that prices have to decline in the short-term,” he said.
“The longer term comes with some greater risks,” cautioned Hildebrand. “An increasing share of investors are believed to own … units. Right now a lot of them are holding on, but will they continue to do that in the future? And the bigger question is what demand is going to look like. It’s obviously more difficult to anticipate the economic environment a few years out than it is say over the next year or so. So that’s where the risks lie, I would say 2014, 2015.”
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