“Nation-wide indicators continued to suggest that there is a low probability of a widespread and steep downturn in Canada’s housing market in the next 12 months,” RBC said in its latest Canadian Housing Health Check.
However, there are some localized issues that could become an increasing concern over the coming months.
“At the local level,indicators paint distinct risk profiles with overheating concerns topping the list in Vancouver and Toronto, and weak economy posing the main threat in Calgary,” RBC said. “Escalating prices in Vancouver and Toronto: Affordability-related risks continued to increase significantly in Vancouver and Toronto this year, as prices accelerated further, especially for single-detached homes.
“Vancouver, in particular, showed strong signs of overheating, although recent declines in sales brought some cooling.”
Of course, no housing market report these days would be complete without a mention of the controversial 15% foreign sales tax in Vancouver.
“The surprise introduction by the BC government of a new 15% tax on home purchased by foreign nationals in Metro Vancouver added a new layer of risk for the Vancouver market,” RBC said. “The tax is without precedents in Canada and substantially raises uncertainty in the short term.”
Reading between those lines, it seems RBC is shaking a judgemental fist at B.C. policymakers.
Meanwhile, in Calgary RBC notes the ever-present influence of the economic downturn on its housing market.
“Weakening demographics, surging unemployment and rising inventories are growing sources of concerns,” RBC said. “Home resales have recovered somewhat since hitting a multi-year low at the start of 2016; however, the scope for further gains is limited in the near-term. Downward pressure on prices is likely to persist.”
To read the entire report, which includes detailed region-specific forecasts, click