Despite the massive impact the crash on oil prices has had on major pillars of the Canadian economy, 2016 is expected to be a relatively great year for real estate investors. Investment rates for houses in Canada’s three biggest cities; Toronto, Vancouver and Montreal are expected to rise despite any economic recession that may be experienced in the country.
RBC for instance states that the likelihood of there being a crash in Canada’s real estate markets is extremely low, and in fact suggests that the country’s economy was only likely to continue to grow. Most banks however were not always optimistic; with a majority of them casting shadows on the future of the country’s real estate industry should there be any recession in 2016.
RBC, which is highly confident on a substantial rise in the housing industry, based their conclusions from the fact that the low oil prices which have been a major blow to all oil producing countries has not had a very detrimental effect on Canada as a whole. Their claim that the country’s three largest cities are likely to post their best real estate’s rates this year are however not realistic. The fact that other smaller cities such as British Columbia and Ontario are experiencing a relatively high demand in the housing industry might already be a good reason to null their claims.
In a published report, RBS stated that they expected more jobs, a rising economy and better incomes for most people in 2016. And should this happen, the only reality for Canada’s three big cities’ real estates would be growth and more growth. Immigration into Toronto, Vancouver or Montreal might also contribute a rise in interest rates when it comes to housing. RBC was however less optimistic about the future of condominiums in the city of Montreal.
While most market analysts expect a housing rates’ increase of less than 2% in Canada’s three biggest cities, provinces that are most affected by the oil crash such as Alberta might see housing rates go down to the negatives throughout 2016 according to a different report. With more than 30,000 having been shed throughout last year, the only hope for real investors from Canada lies in the big three cities. Another undisputed fact that people must continue to spend money on housing despite all odds is a source of hope to many real estate developers and investors throughout the country.
Should a recession hit Canada or should the housing industry experience a rather low growth rate, cities such as Toronto, Vancouver and Montreal are likely to be affected in more than one way. For one, more home owners will be encouraged to spend more especially because their net worth will be boosted to some extent. On the other hand, mortgage rates will most probably rise while the government’s sanctioned high down payments will probably remain constant.