Saturday March 27th, 2010 - Canadian Housing Market Is Strong

Home buyers have carried the momentum of the Canadian housing market through to this year as they hope to avoid the introduction of Harmonized Sales Tax (HST) to British Columbia and Ontario on July 1, and tighter qualifying criteria for insured mortgages in mid-April.

Low mortgage rates, a stronger labour market and anticipated higher borrowing costs are contributing to buyers’ urgency. Housing markets are capitalizing on this urgency, with Canada MLS sales prices predicted to reach record levels and new and resale homes averaging a new high. Average prices are forecasted to rise eight per cent to $345,000.

Sales in January and February are only slightly below 2009’s near-record levels, says Scotiabank’s recent report.

The market is expected to have a better balance than in 2009 with an increase in new construction and in number of listings. However, with the introduction of HST and higher home and interest rates, sales will most likely slow in the second half of 2010. Housing stock will likely slow as well as prices cool and supply increases.

Scotiabank’s report expects that MLS sales volume will reach 510,000, a 10 per cent increase over 2009, and housing starts are estimated at 190,000, up from 149,000 in 2009.

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