The Canadian housing industry sales came down 5.6% in February 2008 against sales recorded in January 2008, primarily due to slow growth of country’s subprime mortgage market.
As per the statistics given by the Canadian Real Estate Association (CREA), February 2008 was gloomy as seasonal sales got adjusted to 5.6%, down compared to a month before, as reported by Economicnews.
CREA also said that the homes sold through MLS (Multiple Listing Services) reached 38,365 in February at an average price of $313,065. Though the average price for sale went up by 6.2% annually, the increase was the smallest since November 2004. Besides, seasonally revised listing for residential constructions also plunged 2.8% in February 2008 from January record level. Altogether, the total sales of homes in dollars slipped down 7.1% to $12.0 Billion against January 2008 total sales volume.
Experts believe that Canadian housing market is affected by the slow growth rate in the country’s subprime mortgage market that provides credit to the millions of Canadians. Moreover, an increase in interest rate by money lenders is also making home costlier. Also, the mortgage carrying costs were filliped by high mortgage rates, consequently turning away the consumers from housing market.
Furthermore, there is a shortage of homes available for sale and the increasing demand for resale houses is building pressure on the Canadian housing market in the form of higher prices and causing a decline in the overall industry. Poor credit conditions’ impact on the industry can’t be discarded as well.
According to industry experts, cutthroat competition among the domestic players is also retarding the pace of construction of new homes. The construction raw material has skyrocketed in last few months, forcing homebuyers to opt for ready-made homes instead of building one. The impact of spiraling global fuel prices on consumers’ spending capabilities can’t be neglected as it directly affects the housing industry. Additionally, low wages and fall in employment rate are too reducing the demand in the Canadian housing industry.
According to a Research Analyst at RNCOS, “The growth of the Canadian housing industry has been severely hampered by the weak financial system in the country. People are facing problems to get home loans or credits that leading to decline in the demand of new homes in Canada. Therefore, home dealers and contractors should devise policies to provide easy and affordable loans to people so that they buy homes.”
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