15 October 2012
Nevertheless, there is also good news in the report. The Canadians have more assets than expected: per capita net worth was up by $7,900 to $190,200, mainly due to an improved calculationof unlisted company shares.
Meanwhile, analysts believe Canada is in a better situation than our southern neighbour, as the borrowers have more equity in their houses. In addition to it, the majority of their mortgages are backed through the Canada Mortgage and Housing Corporation (CMHC). In the same time, risky subprime loans stand for quite a small part of the total lending (some estimates them as 3-5% of the total mortgages).
On Monday the Canadian Real Estate Association also published its report, showing that sales of existing homes were down by 15.1% last month in comparison to the previous year, though it was still higher than in August.
We agree with BMO economist Doug Porter who believes that Canadian housing market is up for soft landing not a big crash. Current slowdown in housing activity is very healthy pause for real estate market, since prices in some local metro areas became unsustainable and income needs sometime to catch-up.