Expert Surprise Predictions For Canadas Property Market

Recent figures showed that August
saw the biggest month-on-month decline in property sales in Canada for over two
years.  While some economists
believe that this shows the country’s post-recession housing boom is set to end
with a crash, others believe that a small price correction is overdue and will
not have a bigger impact on the country’s economy.

So, is Canada set to see a US
style property crash?  Keep reading
to learn more.

Canadian property set to see modest price falls but no crash

According to the Toronto Sun, figures showing a slowdown
in Canada’s property market were ‘largely expected’.  And, the head of Bank of Nova Scotia, believes that a market
correction will not have a significant impact on the Canadian economy or on its
big banks.

Rick Waugh said: “There can be
some hardships, but because the Canadian economy is so well diversified – we
have a strong national balance sheet, we have a strong income statement for our
country, and our banks are the same … (so) that while we have to be concerned
– we should be – it is nothing like what has happened in other jurisdictions.

“What we see now is probably at
worst a soft landing.”

The latest Canadian Real Estate
Association (CREA) figures showed that the month-on-month fall in Canadian
house sales between July and August was the largest for two years.  The data prompted the industry group to
cut its property sales and price forecasts for this year and next. CREA now
forecasts sales will rise just 1.9 per cent in 2012 and then decline by 1.9 per
cent in 2013.

The Toronto Sun reports that ‘many economists have forecast a price
correction of between 10% and 15%, while more bearish experts see a 25% drop in
prices, similar to what happened in the 2009 U.S. housing collapse.’

However, Waugh, the head of
Canada’s third-largest bank, said that all indications so far point to a fairly
modest correction that will not significantly affect lenders.  He added: “The numbers we’re seeing are
really not a huge surprise. They are well within our expectations of, say, 10%
(declines) in sales volume and 10% in prices.”