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24 Mar

Housing market to be tamer over next decade:


Posted by: Kimberly Walker

Housing market to be tamer over next decade: Scotiabank

| Wednesday, 24 March 2010

Despite 2010’s strong start, Scotiabank expects the “twenty-tens” Canadian housing market to pale in comparison to the previous decade.  

A report titled “Global Real Estate Trends”, released by the bank yesterday, speculated the volume of home sales transactions will increase by 10 per cent compared to last year while average prices are expected to break $340,000, a record high. Housing starts are also expected to increase.

But this hearty activity is expected to drop off later this year when new qualifying criteria for insured mortgages take effect in April and the HST is introduced in July. Scotiabank expects lower sales volumes, lower prices, and a decrease in new construction in 2011. 

“It is time for Canadians to reset their housing market expectations. We expect 2010 will mark a transition year as the boom of the ‘aughts’ gives way to a sustained period of more subdued housing activity over the coming decade,” the report said.

The millennium decade, in comparison, was, for the most part, consistently booming. Between 2000 and 2009, real home prices increased an average of 5.2 per cant annually, the strongest decade of real price appreciation in at least 50 years. Housing starts during the decade averaged over 200,000 units a year, the highest they’d been since the 1970s.

Strong, economic growth, low unemployment, innovative mortgage products and an increase of real per capita disposable income all contributed to the demand seen last decade, Scotiabank said. The bank anticipates much slower growth for the Canadian economy through at least 2015.

Nick Lypaczewski