The big risks – high household debt, affordability issues and muted wage growth – should not pose a serious threat to the Canadian housing market in 2014, despite what the naysayers say.
That is according to the new Global Real Estate Trends report by Scotiabank Economics. They say that improving global growth, attractive borrowing costs and population growth in key demographic segments should be enough to support housing demand next year.
The rental market will also remain strong in 2014 thanks to the “widening cost premium between owning over renting” in major centres. However, they do warn that vacancy rates “could edge up next year alongside an increase in supply from recently completed investor-owned units."
Alberta, in particular, is tipped to outperform national housing markets.
Scotiabank is also expecting a moderately lower level of resale transactions next year with home prices also remaining relatively flat. “Downside price risk is greater in the more amply supplies high-rise segment than for single-family homes,” the report says. Investor interest in renovation projects may also wane in 2014 as more people focus on their spending and general pricing environment.
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