28 May 2014
In addition to it, home sales were also down across Canada. In RBC’s opinion, the main reason for the decline was bad weather, so the trend isn’t expected to continue.
“In general, home resales fell by 4.8% last winter between the fourth quarter of 2013 and first quarter of 2014,” – the report suggests. “Unfavourable weather conditions reduced the market activity, and we predict this to change soon when better weather is back.”
RBC says the future changes of interest rates (a hike or a decline) will play the most significant role in determining whether the real estate in Toronto and Vancouver becomes more affordable in the nearest future.
“Of course, mortgage rate decrease may serve as a potential offset, as well as faster household income growth,” – RBC says. “Nevertheless, the normalization of monetary policy will cause rate hikes, which may be too large for other affordability influencing factors to react.”