Top real estate franchiser Royal LePage predicted in its 2016 forecast that prices will increase by a maximum of 4.1 per cent across 53 markets nationwide, cooling from a vigorous 6.5 per cent annual growth over the past few years.
“While most of the country will continue to see house [price] appreciation in 2016, we expect that the pace of increases in Greater Vancouver and the Greater Toronto Area — where real estate appreciation has significantly outpaced wage growth — will settle to a more sustainable, single-digit price increase trajectory,” LePage president Phil Soper told the Financial Post.
Soper added that new mortgage requirements set to take effect on February 15, which would require at least 10 per cent downpayment on homes worth more than $500,000, should not be a cause for concern as the Canadian market still has room for growth.
Meanwhile, credit agency Fitch Ratings said it does not expect a price drop to take place within the year. The company projected a 2016 property value growth of approximately 2.5 per cent.
Fitch cited the possible impact of an emerging risk factor, however. “National prices [are] 20 per cent overvalued compared to growth in long-term economic fundamentals leaving markets exposed to downside risk,” the company stated.
In addition, Fitch warned about the growing rate of household debt in the country, which was at 165.5 per cent of disposable income as of the latest count. Such a disparity might place higher-quality properties out of reach of more and more Canadians in the coming months, the company said.
The Canadian housing market is expected to grow at an average of 2.5 per cent this year, according to two new reports released on Wednesday (January 13). The figure represents a more moderate pace compared to that of previous years.