According to a Reuters poll of analysts, 2021 will be the year for Canadian home prices to rise immensely. It will be supported by ultra-low interest rates and experience increased demand driven by massive fiscal support.
On average this year, 15% in house prices were predicted to rise. This idea has been the largest expected annual gain since Reuters began polling for 2021 over two years ago.
However, home prices were expected to rise at a much slower rate and an average of 3.7% for the next year. This assumption is lower than the 4% prediction from the previous years.
For major Canadian cities such as Toronto and Vancouver, their price gains will rise 13.9% (Toronto) in 2021 and 10.3% in Vancouver.
Between different analysts, they have different reactions to what is going to happen. For example, 10 of 14 analysts said that interest rate sharp increases will stabilize Canada’s housing marketing activities and prices.
Senior economist at Moody’s Analytics, Brendan Lacerda, noted that the high debts of Canadian households make them more conscious of the interest rate changes.
With the fiscal stimulus, the rising borrowing costs will likely cool down the housing market activity. Many analysts expected an increase across cities such as Vancouver and Toronto when asked on demand this year nationally.
According to the chief economist at the Central 1 credit union, Bryan Yu, demand is expected to remain strong. However, moderation to more normal levels of activity is expected as well. Many things contribute to this trend, such as affordability, erosion from high prices, increased contract mortgage rates, and reversal of some pandemic era purchasing trends.
In the back half of this year, a record pace of price acceleration and home sales is predicted to give way to moderation.
The growing profitability of the Canadian real estate marketplace is a motivating drive for foreign direct investment (FDI). FDI players could invest in Canadian real estate with an expectation of a remarkable ROI. Hence, the right time to join the train as an FDI investor is now.
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