By LuAnn LaSalle, The Canadian Press
MONTREAL – Canada’s housing market stands out globally for its strength but economic uncertainty and weaker consumer confidence could keep potential new buyers on the sidelines, says a Scotia Economics report.
“Overall, you’re probably in an environment where businesses and consumers will be a little bit more cautious and that would spill over to the housing market,” senior economist Adrienne Warren said Tuesday, after the bank released a report on global real estate trends.
The Scotiabank report said Canada’s housing market is notable for its “resilience and longevity.”
And even though Canadian real estate prices were up five per cent year-over-year in the April to June period, they started to level out in July and August, Warren said from Toronto.
“I just think the other factor we’ve seen in the slowing and softening of prices just reflects the fact that the housing market itself has become fairly balanced between the number of buyers and sellers out there,” she said.
“If anything, I think the cooling off in prices is positive for longer-term affordability for buyers.”
While interest rates are expected to remain low for some time, the Canadian economy is showing signs of losing some momentum, a factor that would affect house purchases.
“So the question mark will be to keep an eye on the job market.”
But Scotiabank’s latest real-estate outlook said Canada has shown a resilience that few other countries have been able to maintain.
Scotiabank (TSX:BNS) noted that of the nine major developed markets it tracks, only Canada, France and Switzerland showed housing price increases year over year.
Warren said Canada has had a strong housing market since about 2000, but expects house prices to more or less level off over the next couple of years.
“From a demographic perspective, the people who had wanted to come into the market and take advantage of the low interest rates, a lot of that has been satisfied.”
While Canada has charted its own course in the housing market, the U.S. real estate market hasn’t recovered yet and has a spill-over effect in this country, she said.
“The weakness in the U.S. housing market is a big factor contributing to the continued weak U.S. economy and that spills over to Canada whether it’s in building materials for their housing market that builders aren’t building right now and that hits things directly like forestry.”