Sunday, October 30, 2016

Countries with the highest house price growth

New research from property consultancy Frank Knight places Turkey atop its Global House Price Index, which tracks countries’ average house price growth.

The latest data compared the second quarter of 2016 to the previous year.
  1. Turkey 12-month percentage change: 13.9
  2. New Zealand 12-month percentage change: 11.2
  3. Canada 12-month percentage change: 10
  4. Chile 12-month percentage change: 9.4
  5. Sweden 12-month percentage change: 8.9
  6. Malta 12-month percentage change: 8.8
  7. Austria 12-month percentage change: 8.1
  8. Iceland 12-month percentage change: 8.1
  9. Mexico 12-month percentage change: 8.0
  10. Germany 12-month percentage change: 7.9

Wednesday, October 26, 2016

Get used to Low Interest Rates & Rate Announcement by Bank of Canada

The Bank of Canada announced in September that it is maintaining its target for the overnight rate at 1/2 per cent. The Bank Rate is correspondingly 3/4 per cent and the deposit rate is 1/4 per cent.
Get used to low interest rates, slow growth

Good news and bad news for homeowners; low interest rates are set to be around for a while but the Canadian economy is likely to remain sluggish.

Speaking at a conference in the UK, the Bank of Canada’s senior deputy governor Carolyn Wilkins said that weakness in the global economy poses a risk to Canadian growth with low interest rates and slow growth damaging corporate investments and impacting the labour market.

Additionally, she said that “households could experience longer and more frequent periods of shrinking incomes, making their debts more burdensome.”

The low cost of borrowing may also encourage greater credit risks with potential damage to the financial system.
Ms. Wilkins urged lenders and the wider population to “adapt to the new reality of lower potential growth.”

Low interest rates are here to stay: Poloz

The governor of the Bank of Canada has warned Canadians that low interest rates are here for the long term, affecting retirement plans and business investment.

For homeowners, it should mean mortgage rates remain low for many years however low rates won’t help housing affordability, especially for first-time buyers.

Stephen Poloz also warned that low interest rates could impact business investment which in turn could have a negative effect on the labour market.

Sunday, October 23, 2016

Supply is central to price growth in Canadian real estate

A comprehensive report released few weeks ago argued that contrary to the popular notion of foreign demand as the prime mover of price growth in Canada’s real estate markets, the dearth of housing supply is primarily to blame.

In its September 23 news release, Fortress Real Developments pointed out that the drastic reduction in the supply of single-detached housing in Canada over the past few years coincided with the acceleration of growth in average home prices across the country.

“Municipalities pushed right against the Greenbelt like Aurora, King City, Richmond Hill, Vaughan and Whitchurch-Stouffville are experiencing a shortage of single-detached homes, and high price growth,” according to the press brief, which was released via Canada NewsWire.

“Until recently, the lack of residential unit supply has rarely been discussed as a factor influencing high house prices,” the news release added. “Factors that lead to a decreased housing supply include vehicle transportation and commuting, bodies of water and natural boundaries, obstructive planning policies and disruptive taxes.”

Other possible influences are advocacies preventing the smart usage of more land, Fortress explained.

“Anti-development groups have been successful in reducing housing supply, while driving up the values of their homes.”

Rarely have supply-side aspects like development costs, environmental protection, urban containment, and undue regulation been discussed, according to Fortress senior vice president of market research and analytics Ben Myers.

“For the sake of homeowners and potential home buyers, both demand and supply must be part of any debate going forward by governments looking to improve the short and long term health of the Canadian housing market,” Meyers stated.

Wednesday, October 12, 2016

"Doubling up" on the rise in red-hot markets

More and more consumers in Vancouver and Toronto are purchasing and moving to new properties even as they continue to maintain ownership of their old homes, taking advantage of the unprecedented demand in these overheated markets.

“In essence, their old principal residence becomes an investment property — one they hope will deliver some income but more importantly will lead to massive capital appreciation,” real estate reporter and long-time markets observer Garry Marr wrote for the Financial Post.

While definite figures have yet to be collated, TD Bank associate vice president of real estate secured lending Pat Giles stated that “doubling up” in an increasingly common practice not only in Canada’s leading markets, but all throughout the country as well.

“I don’t have the numbers behind it, but I can tell you anecdotally, we have seen many customers considering income properties, and that’s probably not surprising given the low interest rate environment we are in,” Giles said.

“It’s still a very small portion. But in the low-rise market the potential for speculating or flipping is high. When prices rise, people take risks,” CIBC World Markets deputy chief economist Benjamin Tal agreed.

A major driver of the phenomenon is the prevailing environment of home price growth, which facilitates generous profits for flippers. In August, Vancouver saw a 36 per cent year-over-year rise in the average price of detached homes, while Toronto experienced a 21.5 per cent increase in the same property type over the same time frame.

However, while going for this option might seem reasonable in light of the current fiscal climate, Scotiabank vice president of real estate secured lending Janet Boyle said that it’s not for everyone.

“Having an investment property is a lot of work. There’s upkeep, you have to stay current, municipal regulations, just a variety of things to consider,” Boyle cautioned.

Thursday, October 6, 2016

Ontario home sales set new August record

Residential sales activity reported through the MLS® Systems of real estate Boards and Associations in Ontario numbered 22,350 units in August 2016, an increase of 17.2 per cent from a year earlier.

This was the highest August sales figure on record, smashing the old record set back in 2016 by 16.6 per cent.

Nationally, home sales activity rose 10.2 per cent from year-ago levels in August 2016, boosted most by the year-over-year increase in Greater Toronto.

Provincial year-to-date home sales were running 9.3 per cent above the first eight months of 2015. The 173,896 homes that have traded hands so far this year put 2016 well on track to set a new annual record.

The provincial average price for homes sold in August 2016 was $518,586, rising 16.2 per cent from a year earlier.

The national average price, by comparison, rose 5.4 per cent on a year-over-year basis to $456,722.

The year-to-date average price for Ontario was $527,278, rising 13.2 per cent from a year earlier.

New listings on the MLS® Systems of real estate boards in Ontario numbered 28,562 units in August, a decrease of 3.2 per cent from a year earlier.

Active residential listings numbered 46,359 units at the end of August, down 31.4 per cent from one year earlier. Supply has now fallen to the lowest level in over a decade.

There were just 2.1 months of inventory at the end of August 2016, down from 3.6 months at the same time one year ago and below the long-run average for this time of year. The number of months of inventory is the number of months it would take to sell current inventories at the current rate of sales activity.

The value of all home sales in the province totalled $11.6 billion in August 2016, an increase of 36.2 per cent from August 2015. This was the highest level of any August on record and the first August to surpass $10 billion.

The dollar volume of all home sales in Canada was up 16.2 per cent on a year-over-year basis.

Sales of all property types in Ontario numbered 23,727 units in August, up 18 per cent from August 2015. The value of those sales amounted to $11.9 billion, rising 36.5 per cent from a year earlier.

Tuesday, October 4, 2016

GTA on course for high-rise sales record

Sales of high-rise homes in the Greater Toronto Area are on course to hit a whole-year record in 2016 with year-to-date sales already the highest ever.
The Building Industry and Land Development Association (BILD) says that 17,949 high-rise homes sold by the end of August, 1,880 in August alone according to Altus Group data.

“Our industry is building to government intensification policy and we are building at least as many high-rise homes as low-rise homes,” said BILD President and CEO Bryan Tuckey. “The supply of low-rise homes – especially single family detached homes – has plummeted in the years since the Growth Plan was introduced, but demand for those types of homes has not diminished. As a result, prices have increased dramatically.”

That low-rise inventory (including single- family detached, semi-detached and townhomes) was just 1,379 in August and average price hit a record $931,506, up 16 per cent year-over-year. For just single-family homes the average in August hit $1.16 million.

High rise home prices averaged $480,914, another record and 7 per cent higher than a year earlier. Supply was down with 14,600 units available as August is traditionally a slow month for starts.

“Demand and prices of high-rise homes are also starting to climb as more people are priced out of the low-rise market,” Tuckey said. 

Sunday, October 2, 2016

Monthly Resale Housing Market Figures

Toronto Real Estate Board President Larry Cerqua announced that Greater Toronto Area REALTORS® reported a record 9,813 sales through TREB’s MLS® System in August 2016.

While this sales result was 23.5 per cent above the number of transactions reported for August 2015, it is important to note that the majority of sales are reported on working days and there were two additional working days in August 2016 compared to 2015. When the year-over-year discrepancy in working days is accounted for, the annual percentage change in sales is closer to 13 per cent.

“The conditions underlying strong demand for ownership housing remained in place, including a relatively strong regional economy, growth in average earnings and low borrowing costs. Unfortunately, we did not see any relief on the listings front, with the number of new listings down compared to last year. This situation continued to underpin very strong home price growth, irrespective of home type or area,” said Mr. Cerqua.

The MLS® Home Price Index (HPI) Composite Benchmark for August 2016 was up by 17.2 per cent on a year-over-year basis. Similarly, the average selling price for all home types combined was up by 17.7 per cent on an annual basis to $710,410. Both the MLS® HPI benchmarks and average prices for low-rise home types were up by double digits percentage-wise.

“Population in the GTA continues to grow. The resulting growth in households coupled with favourable economic conditions and low borrowing costs means that we remain on track for another record year for home sales. Against this backdrop, TREB will also be releasing new third-party research, and consumer and REALTOR® survey results throughout the fall and winter, with discussions focusing on foreign buying activity and issues affecting the supply of ownership housing,” said Jason Mercer, TREB’s Director of Market Analysis.

Saturday, October 1, 2016

Ontario to introduce regulations for home inspections

Ontario said it plans to start licensing home inspectors in the province as part of legislation that could be passed as early as this fall.

Minister of Government and Consumer Services Marie-France Lalonde said the province plans to introduce laws that would establish minimum standards for home inspections, including the type of information that inspectors would be required to disclose to home buyers and the language inspectors are allowed to use in their contracts. The government said it also plans to create an independent administrative authority to licence the province’s more than 1,500 home inspectors.

“These changes would ensure consumers benefit from quality advice, are protected from surprise costs and aware of safety issues before buying a home,” the province said in a news release. “This will also create a level playing field for the home inspection industry, preventing inspectors with little or no training from competing with qualified professionals by offering lower rates.”

Home inspectors are one of the few professionals tied to Ontario’s real estate industry that are not licensed or regulated, even though nearly 65 per cent of all homes sold on the resale market in Ontario are inspected each year, according to government estimates.

Currently, home inspectors are governed by a patchwork of different industry organizations, each with their own training programs and accreditation standards, although industry associations have urged the government to introduce rules that would apply to all inspectors.

Ontario has been examining the issue of licensing home inspectors since 2013, when the idea was among 35 recommendations made by an expert panel the province created to study ways to strengthen consumer protection in the housing market.

Liberal MPP Han Dong introduced a private members’ bill in February that sought to license the industry, prompting the government to announce plans to draft its own legislation.

If the legislation passes, Ontario would join B.C. and Alberta as the only provinces in Canada to regulate the home-inspection industry. The B.C. government announced earlier this year that it planned to tighten its regulations governing home inspectors, including requiring inspectors to have liability insurance, introducing stricter rules around record-keeping and banning contracts that limit an inspectors’ liability.

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