A new report from CIBC is warning of an excess of rental units in Toronto and Vancouver.
They are basing this outlook on the large number of condos being built in both cities and predict a less than half point rise in vacancy rates, so ‘warning’ sounds a bit strong.
The concern is that increased competition for good renters could drive owners to sell their condos, leading to a further downturn in the condo resales market.
Economists and policy makers have worried that an “increased supply of rental units will flood the market and will lead to a wave of sales by disappointed investors with no bargaining power,” Mr. Tal writes in the report. The Bank of Canada highlighted concerns about the condo market in December when it outlined the key risks to the economy.
“A sharp correction in the condominium market could spread to other segments of the housing market with stretched valuations, as buyers and sellers adjust their expectations of the future path of house prices,” the central bank warned. “Such a correction could also have significant repercussions on the real economy, since the construction sector is an important component of economic activity.”
Read the full article here.
Well looky here!
You made it to the end of another work week!
And that means on this particular website that it’s Free-for-all time!
This is our regular end of the week news round up and open topic discussion thread for the weekend, here are a few recent links to kick off the chat:
–Can the media predict a bubble?
–EI numbers up 10% in BC
–Is ‘Depreciation’ a dirty word?
–Signs of overbuilding?
–Toronto prices to double in 25 years
–Get drunk with the kids
–Put your face on a bus stop
–The cheese loophole
–Not pasta sauce, the Eiffel Tower
–Is US housing set for another crash?
So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!
Are we careening towards a sharp correction in house prices across the country, or are we just comfortably ensconced in the new value of property?
A Goldman Sachs report is the latest voice of warning about overbuilding and overpriced houses in this country.
Adding its voice to a growing chorus of concern, a report from Hui Shan, an economist at Goldman, late last week warned: “what goes up can keep going up, but then tends to come down.”
Ranking high-growth property markets in the last four years, Canada comes fourth behind Israel, Norway and Switzerland, according to her research. But unlike some other markets, construction activity has been trending up for years and has not shown signs of slowing down in Canada, she explained.
“If the elevated level of homebuilding persists in coming years, the risk of overbuilding will increase substantially. And if the ongoing housing boom is followed by a housing bust, the price decline can be quite significant given the excess supply of housing at that point,” she said.
On the bright side for some, they are predicting that prices could still see some upside before correcting. Read the full article over at CNBC.