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Canada’s housing boom could soon come to an end

Two new forecasts out Wednesday suggest the Canadian housing market may still have a little more room to grow but the pace of price increases will slow in 2016.

Fitch Ratings suggests prices across the country will grow by 2.5 per cent this year but the ratings agency also is concerned about downside risk in the housing market.

“National prices (are) 20 per cent overvalued compared to growth in long-term economic fundamentals leaving markets exposed to downside risk,” the company says in its global housing and mortgage outlook. “No significant downward price movements are expected.”

The agency went on to cite affordability as a concern in the marketplace and noted household indebtedness is 165.5 per cent of disposable income, among the highest of countries it rates.

Also weighing in with a new forecast was Royal LePage, one of the country’s leading real estate companies, with a prediction that prices will grow by 4.1 per cent in 2016.

LePage which surveys 53 markets across the country says the average price of a home reached $500,688 in the fourth quarter, up 6.5 per cent year over year.

“The frenetic pace of our country’s largest housing markets should moderate through the year ahead,” said Phil Soper, the president of LePage. “While most of the country will continue to see house appreciation in 2016, we expect that the pace of increases in Greater Vancouver and the Greater Toronto Area — where real estate appreciation has significantly outpaced wage growth — will settle to a more sustainable, single-digit price increase trajectory.”

LePage said mortgage changes by the Liberals that kick in Feb. 15, requiring consumers to have a minimum 10 per cent downpayment on the portion of a home over $500,000 will have a minimal effect on the market.

Soper called it a “slight tap on the brake” for Canada’s two most expensive cities.

Resource By:-http://business.financialpost.com/personal-finance/mortgages-real-estate/is-there-one-more-year-left-in-this-canadian-housing-boom

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