Canadian housing markets have been going through a period of tremendous growth in the past decade or so. The boom in real estate prices which started in 2009 had resulted in doubling and even trebling the price of properties and has only started stabilizing towards the end of 2017 when certain measures were introduced by the Canadian government to put a check on such skyrocketing prices.
The good part about the price correction measures introduced by Canada is that they have managed to put a check on the unrestricted increase in real estate prices bust have also ensured that the prices do not go into free fall.
When Did The Boom Actually Start Subsiding?
It has been estimated that it was around the middle of 2017 that the market sentiments started shifting and the rapid boom in the housing market was stalled somewhat. Towards the end of 2017, the housing market started stabilizing and it was at the beginning of 2018 that home buyers actually started encountering a decline in the real estate prices.
Increasing the Interest Rates Was a Key Reason for Price Correction
Traditionally, an increase in interest rates always results in a negative impact on the growth of the economy. The increase in interest rates by the Canadian government did affect other sectors of the economy as well.
However, the resultant slowdown in the Canadian housing market was deemed to be quite healthy for the market as otherwise there would have been no way to exercise a check on the rapidly increasing real estate prices. The interest rate increase has been very effective in bringing down home sales in high-value areas like Toronto and Vancouver.
A Lot is Still Left to be done to cool down the Real Estate Markets
The booming prices of the housing market in Canada had left a lot of borrowers worried and distraught with mountains of debt looming over them. This was particularly true for young homeowners and buyers who have seen extremely low mortgage rates.
Though the steps taken by the government do seem to have triggered a price correction, there is still a lot more to take care of. The borrowers who have signed in for high debts in the recent past to be able to buy homes would be in for more trouble with the refinancing options. However, with the stabilization of home prices, there does seem to be some hope for the future.
The Canadian government has been able to maintain a fine balance between boom and bust in the real estate market for now. The recently introduced hike in interest rates have paid off well and the same rate is likely to continue for the next couple of years, to say the least.
However, the government has been cautious of introducing any more changes which can affect the growth rate as they do not want the prices sliding down too rapidly either. A flat rate of growth is predicted for the next few years which is sure to achieve the price correction that Canadian government has set out to do.