Recent news reports of Canadian Housing Market have been very confusing these days. Quests of the truth have been hunting many economists. And debates have been arising in between market analysts.
Sales of the Canadian Home, according to the statistical results of Canadian Real Estate Association that was released on the 17th of September, have boosted up from its sales on July. Plus, this rise have been consecutively happening for the past four months already.
However, in contrast, the sales of the Real Industry have been dropping for 4.8 percent substantially, year after year and after year.
Doug Porter, the chief economist of Bank of Montreal is confident that the erratic season for the housing market is finally over. According to him, the struggle of many policymakers just to raise the industry is done and cured. In September 17, he announced that the housing market today is no longer a subject of concern, especially that the issue of household borrowing is particularly slowing down in pace.
By this, he is referring to the recently released Statistics Canada which gave an overview of how household debt in Canada have leveraged.
In the second quarter of 2018, Canada’s household had a total of $1.69 debt for every dollar of excessive income, which is a little lower from the second quarter of 2017. And they believe that the stress test that was introduced in January helped a lot in decreasing Canada’s debt activities.
However, there are economists who disagree with this assessment of Porter.
A global study taken by the researchers of Oxford Economics released a data analysis through the Assessing the Risks from High House Prices citing that the Canadian Real Estate market is currently approaching a high risk of major price correction.
The assessment showed that Canada ranked 3rd in the list of the World’s Riskiest Housing Market, following Australia and Sweden and followed by New Zealand and Hong Kong.
In addition to their reports, it had been a general trend that when the prices rise by 35% upwards, based on their historical average, there is 75% of possibility that they will undergo price correction in five years. And the study has proven that in the occurrence of correction, there will be 14% of median decrease.
Lead economist, Adam Slater wrote that high appraisals are gates closer to a risky price downturn in the future.
Even the chief economist of Canadian Real Estate Association, Gregory Klump is unsure of the real status of the housing market of Canada.
These questions are still on-going for many market consumers. That even if it was lifted for the four consecutive months, it is still decelerating in pace.