Canadian Housing Market: What to Expect for 2016

Since the global financial crisis, the Canadian Housing Market has relied on exceptionally low interest rate and job creations to boost the Canadian Economy. As a result, the demands for homes increased, while home prices drastically increased from 2012 to 2015.

As we move into the new year, analysts expect a soft land at the end of 2015, however, the recent downturn of oil prices has put a break on the Canadian Housing Market. The Canadian Real Estate Associate predicts national average housing prices to slow and increase by 1.4% in 2016, compared to 7% in previous years. While housing prices are expected to slow, the housing market may experience slight changes or remain unchanged in 2016. Mortgage rates are expected to rise moderately over the next two years as a response to the slowdown housing markets. As a result, over 750,000 borrowers with mortgage renewals will see an increase of $100 or more in their monthly payments. Furthermore, to prevent the market from collapsing with oil prices, the Canadian Government announced a new down payment rule to cool hot markets in Ontario and Vancouver.

Canada’s Economy remain attractive to foreign investors due to its stability economically and politically. A decrease in oil price and a lower Canadian dollar will only attract more foreign investments into the Canadian Housing Market while inflating the existing house prices in cities like Vancouver. A decline in the Canadian population aged 25-34 will be apparent as they will be driven outside the city due to unaffordable house prices. This will affect the demand on the Canadian Housing Market.

Despite a gloomy start to the year, we expect slight growth from Canadian Housing Market with a slow decrease in house pricing, as it attempts to remain in correction mode.

Here’s a quick summary of the real estate and mortgage market:

Data highlights from the fall mortgage report


The big stories to watch in 2016

Housing starts will decline modestly in 2016-2017

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