Housing market prediction for next 10 years

    지난 1980년부터 2012년 동안 주택을 중심으로 한 캐나다의 부동산 시장은 매년 6.1%의 상승률을 보여왔습니다. 특히 지난 10년 동안은 연 7%의 상승률을 보였지요. 하지만 앞으로 10년 동안은 이런 상승률을 기대하기란 어려울 것이라는 전망입니다. 평균 인플레이션에 가까운 2%가량의 상승을 예고하고 있습니다.

<Canadian housing prices to rise “lacklustre” 2 per a year: TD

Most Canadians’ biggest investment is likely to show a “lacklustre” 2 per cent annual rate of return over the next decade, says TD.>

 

Most Canadians’ biggest investment — their home — is likely to show a “lacklustre” 2 per cent annual rate of return over the next decade, a report by TD Economics predicts.

“In other words home price gains should simply match the pace of inflation,” the report says.

However, houses will still outperform most other kinds of investments, with the exception of the stock market, the report released Monday says.

And residential real estate in Toronto and Vancouver will continue to do better than the national average, the report says.

And residential real estate in Toronto and Vancouver will continue to do better than the national average, the report says.

The report, called “Long-run rate of return for Canadian home prices,” comes amid growing concern about the future of real estate prices.

Slowing economic growth, tighter mortgage rules and the prospect of higher interest rates have all taken the shine off the housing market.

“With the slowdown in the Canadian housing market well entrenched, many are worried about the future value of their homes,” the report says.

But while some fear the long-term rise in house prices might be followed by a correction or even a crash, TD says the market is more likely to slow down and then level off.

After rising an average of 7 per cent a year for the past decade, the Canadian housing market “has undoubtedly cooled down over the past six months,” the report by TD chief economist Craig Alexander says.

But prices are still out of whack with underlying fundamentals, such as price-to-income, price-to-rent and monthly affordability measures, the report says.

The report predicts house prices will experience a “gradual, modest, downward adjustment over the next three years,” followed by a rebound to 3.5 per cent annual increases starting in 2015.

That’s below the average 5.4 per cent a year gain seen since 1980, the report notes, citing data collected by the Canadian Real Estate Association up to 2012.

It’s also well below a projected 7 per cent a year gain in stock market prices for the next two decades, TD says.

TD said its long-term house price projections could be affected by the impact of an aging population. Research is divided on whether demographics will play a positive or negative role, the report notes.

“We assume that baby boomers will not sell their homes in droves, driving down average home prices.” Even if they did, the report assumes it will happen over a period of years. Also supply tends to adjust to changes in demand, the report notes.

The role of immigration will also be a factor as new immigrants take longer to achieve home ownership, the report notes. Canada’s annual immigration target — 250,000 — would have to increase by nearly 110,000 to partially offset the impact of an aging population, the report also says.

Some markets — such as Toronto and Vancouver — are expected to outperform the national average, while Halifax and Saint John are expected to lag.

For Toronto, the average rate of return on real estate prices between 1980 and 2012 was 6.1 per cent a year, second only to Vancouver at 6.4 per cent.

(TORONTO STAR Published on Mon Mar 12 2013 page S7, By: Dana Flavelle Economy)