On Monday, the International Monetary Fund’s chief economist, Christof Stenz, said Canada’s housing market has reached a “new high” in terms of affordability, with the country’s benchmark home price index falling by 12 per cent in October.
But Stenz added that prices for detached homes have remained steady at around $1 million.
He said the province of Ontario has also seen a big drop in prices.
“In Toronto, we have a new record low price of just under $1.6 million, but that’s not a surprise to anybody,” he said.
“It’s also a reflection of a change in demand for houses in this province, a change that has been going on for a long time.”
“In contrast to Ontario, where the price of detached homes has not changed in a very long time, the price in Canada is much higher,” he added.
“What is interesting is that it’s not just Toronto.
You can go to Vancouver, Edmonton, Calgary, Winnipeg, or Calgary, the cost of houses in those cities is very high.”
“Canada’s housing situation is quite complex and the country is moving towards a new equilibrium,” he noted.
“I think it’s a new peak, and I think we’re going to see a new decline, but it is certainly not a crash.”
The IMF chief economist said that as long as the economy is growing and housing prices remain low, “we will be able to withstand the next wave of price appreciation.”
The Canadian Real Estate Association (CREA) predicts a “soft landing” in home prices in 2019, with a slowdown in growth, a gradual fall in the number of buyers and a drop in supply.
“The fundamentals of the Canadian economy remain solid, and we expect the economy to grow at about 2 per cent this year,” CREA president and CEO Greg McLean said.
But the outlook for the economy, which was expected to contract in 2019 by 0.6 per cent, is now forecast to expand by 2.3 per cent.
McLean also noted that the country has the world’s highest home ownership rate at 90.6 percent.
“If you want to buy a home in Canada, you need to have a decent income, you have to be in good shape, and you need a good credit rating,” he told CBC News.
“But if you’re looking to buy, you’re going too slowly.”