Canada among the World's Hottest Housing Markets
House price momentum continues to build with a 5.35% year-on-year rise
Despite market cooling measure, house prices in Canada continue to rise, according to a new report.
The Global Property Guide analysed the property price performance of the world’s big economies.
It found that prices in Canada’s eleven major cities rose by 3.31% during the year to Q3 2014, up from a 1.61% annual rise a year earlier. On a quarterly basis, house prices increased 2.33% in Q3 2014.
The biggest rises were seen in Calgary, with an inflation-adjusted y-o-y increase of 7.33% in Q3 2014, followed by Toronto (5.32%), Vancouver (4.41%), Hamilton (3.52%) and Edmonton (3.01%). Winnipeg and Halifax registered steady growths of 0.57% and 0.27%, respectively.
The Financial Post, meanwhile used the data to compile a list of the top 16 markets based on year-over-year, inflation-adjusted price performance as of Q3. Canada was a top performer, with home prices rising 5.35% year-over-year – greater than 2013’s increase of 2.68%.
According to the Canadian Real Estate Association(CREA), actual sales activity increased 5.2% during the first ten months of 2014 from the same period last year. The growth is supported by low interest rates, which have been held at 1% since September 2010.
Despite concerns that the housing market could be overvalued in some cities, Governor of the Bank of Canada Stephen Poloz confirmed that mortgage rates would be held steady to prevent a big drop in prices.
“The risk comes when some catalyst sets off the vulnerability,” he said. “In this case it would be, let’s say, a rise in unemployment, a significant one, where it makes people have difficulty paying for their mortgage, or a rapid rise in mortgage rates, neither of which we’re expecting.”
He added: “We don’t think we suddenly became over-valued in a bubbly-type way. We don’t think of this as a bubble in any way.”
Canada’s economy is expected to have grown by 2.3% in 2014, from growth rates of 2% in 2013 and 1.7% in 2012, according to the IMF.