Though the realty market in Canada is no longer as robust at it has been in recent times, it has resisted the fears that it was on the verge of a collapse.
A recent report by the Canadian Real Estate Association (CREA) that currently the sale of residential property in the 26 municipal areas it pursues witnessed a 2.4 per cent increase during March last over the earlier month, but was still lower by 15.3 per cent in comparison to the same period in the year before. It indicates that the actions initiated by Finance Minister Jim Flaherty in last summer (July 2012) with a view to make mortgage lending tighter are making the market trail.
Nevertheless, apprehensions regarding a sharp correction in the housing market are yet to be realized, because over 50% of the local markets witnessed more activity and the mean prices for homes, depending on different regions, went up by 2.5% to $378,5 compared to previous year.
According to Sonya Gulati, economist with TD Bank, the current readings indicate that the housing market in Canada is staring to warm up again. However, Gulati does not anticipate a bounce back considering that the country's economy is developing reasonably and the demand has declined, as Canadians are struggling with high levels of debt.
Even Doug Porter, chief economist of Bank of Montreal, says that though sales have dropped by 14% during the past four months in comparison to the previous year, the fall is being regulated and sales would possibly fall by only seven per cent during 2013. In fact, the home prices are defying gravity as well as logic.
In fact, economists concur that the fall in prices would be roughly 10% during the subsequent two years, while a number of them believe that the correction might be about 25%. In addition to home prices, resales and building intentions in future too have declined during the last year, but prices have remained stable following Flaherty's actions.
Although the CREA release revealed sharp differences in data in different regions, in general, it said that altogether 39,527 homes were sold via Multiple Listing Service (MLS) in March, in comparison to 46,669 in the previous year.
In Halifax the home sales declined nearly 11% during March and about 36% from the previous year. Conversely, sales in Edmonton rose by 1.6% during March compared to February and about 1.4% from the corresponding period last year. On a monthly basis, home sales went up in majority of the big cities, especially Vancouver, which witnessed a 10.9% jump, while it was up by 12.2% in Regina.
Before concluding, it may be mentioned that the CREA's index for house prices rose by 1.02 percentage points since February and 2.2 points since March 2012.