Speculation rages about state of Canada's housing market
August 12, 2013
Aug. 15 will mark the release of Canada's housing sales statistics for July, by the Canadian Real Estate Association. Since 2012, when Finance Minister Jim Flaherty imposed restrictive regulations on the country's mortgage insurance market, the housing sector has shown a fair amount of success, with metrics including sales totals, prices and housing starts performing ahead of analysts' predictions, according to The Globe and Mail. Projections for where the market goes from here are quite varied among industry experts, and may be the cause of conversation on phone calls made using prepaid phone cards.
The news source reported that in certain major cities around the country, such as Vancouver, sales have increased by leaps and bounds. The British Columbia city saw a 40.4 percent year-over-year spike in sales of existing homes. Toronto and Calgary experienced sizable sales upticks as well, with respective increases of 17 and 16 percent. Other cities are seeing drops - both Montreal and Ottawa saw decreases of approximately 2 percent from 2012's figures.
In spite of the notable aforementioned gains, some economists and analysts are concerned that the housing sector's current levels of growth are unsustainable, focusing on certain less positive metrics. The Canadian Press reported that recent numbers from Statistics Canada pointed out that residential building permits and multi-unit home building permits both fell during June, by 12.9 and 18.8 percent, respectively.
David Madani, an analyst with Capital Economics, stated that these figures are precursors to serious trouble in the market.
"It's astonishing to me that people are not picking up on this," Madani wrote in a statement to his firm's clients, according to The Canadian Press. "If you see volumes crash and prices still rising, you shouldn't be thinking everything is fine, you should see that as a warning sign. ... If you think about the implication this has for home building, new construction and all the jobs that go along with that, this is quite startling."
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