3 July 2014

February report was based mainly on the idea that spring will bring mortgage rates increase, but they stay unchanged, supporting higher demand.

Low mortgage rates have made it more affordable for buyers to purchase condos. Those first-time buyers, who were pushed away from the housing market earlier, may be coming back benefitting from low interest rates, which have driven the demand for single-family houses.

Nevertheless, Petramala believes the Canadian housing market will cool as soon as mortgage rates go up and supply grows.

“Weaker real estate demand together with stronger supply will probably cool down the Canadian housing market during the next year and a half,” – said Petramala. “When home buyers have wider range of choice they start bargaining, thus lowering the prices. Such a scenario is consistent with the forecasts of a soft landing in Canada’s real estate market.”

In addition to it, the report said this soft landing has already been shown in some regions, like east of Toronto. Meanwhile, expensive cities like Toronto, Vancouver and Victoria will face weaker results soon.