Whatever goes up may not always come down!
Canada has experienced the longest sustained real estate boom in the world, and over the last 25 years, house prices have surged by a record-breaking 553%. The Canadian property market is now worth almost $6 trillion, which represents an incredible 3.4 times the country’s GDP.
For decades, the Canadian real estate sector has experienced an awe-inspiring boom, earning itself the prestigious title of the “world’s longest sustained real estate boom.” That boom left a lot of homeowners with substantial equity they can use to buy bigger properties or help their children acquire properties with gifted down payments or loans today, regardless of where interest rates are
The Canadian real estate market is worth $5.5 trillion, which represents an incredible 3.4 times the country’s GDP. Moreover, the country’s overall retail sales grew each year by over 3.5%, driven by a significant boom in the housing market. This growth is expected to continue strongly into the foreseeable future due to Canada’s growing economy and increasing migration rates.
Why is the Canadian housing market hot?
These are the 6 forces that are fuelling Canada’s real estate boom:
1. Strong economy
One primary driver of Canada’s real estate has been its strong and resilient economy. Despite global economic uncertainties, Canada managed to maintain steady GDP growth and foster a robust job market, which has significantly contributed to the rise in real estate demand.
2. Stable financial System and mortgage market
Canada’s prudent and well-regulated financial system has played a vital role in supporting its real estate market. Unlike many other countries, Canada’s mortgage market adheres to strict lending practices, ensuring that borrowers can repay their loans.
3. Immigrants and population growth
The relentless influx of immigrants, along with the rapid pace of urbanization, has further stimulated the Canadian real estate market. Cities like Toronto, Vancouver, and Montreal have witnessed significant population growth, intensifying the demand for housing and commercial properties. As a result, these cities have become hubs for diverse cultures, businesses, and opportunities.
And with over 2 million new immigrants expected in Canada, over the next 3-4 years, the housing market is likely to remain robust.
4. Low-interest rates and government incentives
Monetary policies implemented by the Bank of Canada, including low-interest rates, have encouraged borrowing and investment in real estate. Additionally, the government’s support for first-time homebuyers and other incentives has further fueled the demand for property ownership, making it more accessible to a wider population.
Although the era of low-interest rates is over, the financial environment is still favourable for the housing market.
5. Foreign investment and global appeal
Canada’s reputation as a safe and stable country has attracted considerable foreign investment, especially from countries facing economic and political uncertainties. Foreign buyers, especially from China and the Middle East, have found solace in Canadian real estate as a haven for their investments.
6. Demand-supply gap
According to the CMHC, to restore housing affordability in Canada, an additional 3.5M affordable housing units are needed by 2030. That means over 22 million housing units will be required by 2030 to help achieve housing affordability for everyone living in Canada
Is this the best time to buy a house in Canada?
The question is always asked, when is the best time to buy a house in Canada? Most immigrants are wondering whether to wait for prices to ease or for interest rates to come down.
The wisdom in the Chinese proverb is readily applicable as an answer: “The best time to plant a tree was 20 years ago. The second best time is now.”