Canadians start assessing the housing market more realistically
According to the latest poll, the number of those who predict a drop in Canada’s real estate prices, rose by 8.5%, marking the largest increase since the Bloomberg Nanos started weekly Canadian Confidence Index surveys. The growth from 12% to 20.5% led to decline of the more general sentiment index.
Such results suggest a change from almost unstoppable consumer optimism in a real estate market, which has followed the Canadian economy since the global financial crisis of 2008. It even ignored all the warnings about prices growth in certain cities being absolutely unsustainable. The preliminary data for August, released by the Real Estate Board of Greater Vancouver, shows the latest government measures for cooling down the market may start working.
RBC keeps an eye on real estate markets of Toronto and Vancouver
According to RBC’s CEO David McKay, the bank is watching housing markets of Vancouver and Toronto closely, as prices there keep rising sharply.
"Lack of supply in the single-family homes sector, reported in both cities, together with high demand, supported by net immigration, is pushing prices higher,'' - McKay said during a discussion of the bank's third-quarter performance.
"Due to prudent underwriting practices and all the necessary methods for monitoring the markets, we can react quickly in case the situation changes.''
McKay says he shares Ottawa's idea of creating a working group for studying the real estate market and developing recommendations, aimed at reducing some risks, coming from significant prices growth and record high consumer debt level.
Wealthy Canadians can buy properties with cash, but some of them still use mortgages
According to the latest poll, high net worth Canadians (who have investable assets of at least $500,000) use mortgages as a part of their investment strategy. To be precise, 67% of them say, they could buy their properties with cash, however, they decided to use mortgages.
“The idea of a mortgage as a solution for those who can’t afford a house purchase without banks’ help doesn’t seem to be true in case of many wealthy Canadians,” - noted Peter Veselinovich, vice-president at Investors Group.
The Investors Group poll looked at how wealthy Canadians tend to use their mortgages.