Canadian real estate market is facing the negative impact of recession which slashed the disposable income of the citizens and resulted in fewer home sales. The proposed government stimulus plan is seen as a ray of hope for the industry.
In December 2008, the existing home sales in Canada dropped 1.8% as compared to previous month, thus closing the year on a pessimistic note, as per the data indicated by Canadian Real Estate Board, reported thestar.
Countrywide home sales decreased 17% compared to December 2007 and reached 27,357 units in December 2008, which is the lowest figure since 2000. The house prices registered a 11.1% decline to an average of $314,552 from December 2007. New listings on the other hand were 9.6% up. Total number of homes sold by Canadian real estate agents decreased 17.1% to around 434,477 in 2008, as compared to 523,855 in 2007. The largest sales decrease of 35.5% (to 25,149 units) was recorded in the western province of British Columbia.
The root cause of Canadian housing market sales slump is ongoing financial crisis. Recession dampened the consumer confidence and hampered the business which resulted in downfall in home sales. In addition, the volatility of country’s financial market has further slashed the home sales demand. Moreover, the unavailability of credit for buying homes is keeping buyers away from markets.
Additionally, economic slowdown has resulted in massive layoffs, leaving a large number of Canadians without money. Thus, they could not make big purchases.
The Canadian Real Estate Association is now asking the federal government to fuel the housing market by raising the $20,000 limit permitted to people to draw from registered retirement saving plan to invest in property. The amount has to be paid back in 15 years.
According to the consensus economic forecast, country’s economy is expected to bounce back in the later half of 2009, thus strengthening the real estate market next year. But the average prices will continue to see their downward trend during the country’s economic recession.
As per a Research Analyst at RNCOS, “Slump in house sales is the testimony of impact of global economic slowdown on real estate market; however, if the government extends its help, the Canadian real estate market may counterbalance the situation in near future.”
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