As the US real estate market continues to perform in a depressing fashion, home owners in Canada are also starting to feel the bite of the turmoil. It is estimated that on average, resale prices have dropped by 9.9 % to US$ 220,302 from October 2007 to October 2008.
With average increases of around 11% in the years 2006 and 2007 this is not good news for Canadian home owners. When we look at the Canadian GDP it is clear that the country is sitting on the edge of a recession.
- In Q4 2008, Canada’s GDP is expected to fall 1.6%
- In Q1 2009, GDP is expected to contract by 1.4%
- In Q2 2009, GDP could fall by another 0.3%
The first signs of trouble surfaced when the sizzling Alberta markets began to slide late in 2007. British Columbia followed early in 2008 and then Ontario and Saskatchewan, the hot spot of 2007. This whole turn of events has cautioned buyers and eroded investment confidence.
But not all is bad in the Canadian property market. While the west experiences cyclic downturns, Canada’s east fires ahead on all engines. Both Halifax and St.John’s show strong prices and momentum in the market. Properties are less affordable as strong growth boosts the market, however this doesn’t seem to negatively affect these markets at all.
While the east is powering ahead, speculators still believe this string of growth will not continue over the next few years when Canada will feel the effects of the recession in all corners of the country.
The market low is hardly a surprise when we look at the worldwide real estate markets. It was inevitable to keep a market from crashing down after it enjoyed stronger than average growth over the last decade.