Nothing quite like the new year to bring out the predictions for what the housing market will be like for the upcoming year. This year, many financial institutions are predicting that the Canadian housing market will slow down and show "classic signs of overvaluation, speculation and oversupply."
On a regional basis, the biggest story last year was Vancouver of course, and it was a tale of two halves: the first half was blistering, and the second half came back down to earth. In fact, by year-end, both sales and prices were down from year-ago levels in Vancouver (see attachment for the table). Worth noting is that just as high-end sales distorted the totals to the high side early last year, weaker sales in that space are now skewing the overall results lower. The local real estate board reports that a quality-adjusted average home price in fact rose more than 7% y/y in December. Similarly, Toronto also cooled by year-end, with price increases easing to 4% y/y, after posting high single-digit gains through the fall.
Our own prediction is that low interest rates will continue to bolster the Toronto housing market and counter the effects of increased prices and household debt. While we believe that condominiums are more prone to price declines in 2012, we rest are pretty confident that the freehold market will stay flat or grow slightly.