Canada’s Market Most Stable in North America

Flags by Torrey Wiley
Flags by Torrey Wiley

PriceWaterHouseCoopers and the Urban Land Institute surveyed over 950 industry experts from Canada, the United States, and Latin America providing an outlook on real estate investment and development trends in these areas. Their report, Emerging Trends in Real Estate, characterized Canada’s real estate market as the most stable in North America.

Canada’s Main Trends

  1. Investment prospects steady, not "stellar“ – Respondents pointed out that Canadian consumers, usually restrained, showed uncharacteristically low spending due to low interest rates, but after the EU and the US debt fears were realized, their enthusiasm ebbed. They signal a more cautious approach in investing. “Greed is off the table,” announced the report.
  2. Tepid commercial construction – Respondents don’t expect significant office development, as retail projects focus on infill condo developments and weak manufacturing suppresses warehouse construction.
  3. The multifamily residential sector as a safe haven – It is supported by immigrant flows, so it will remain quite stable — even if employment growth or home buying decline. Apartment demand is also sustained by empty nesters and seniors moving out of suburban homes into smaller urban units. However, renters are more interested in higher-finished condo buildings, so the report advises developers to build condos instead of apartments.
  4. Disciplined banks – After the financial crisis, bankers have become more careful. According to a respondent, banks aggressively price mortgages but lend cautiously, and they go through more internal processes before extending loans.
  5. Steady housing sector – Canada’s housing sector is quite resilient and can face any potential problems without distress. Strict mortgage rules keep the sector healthy, while banks temper the construction of speculative projects and control the risk of oversupply. Canada’s top markets remain Toronto and Vancouver, attracting many Asian investors.

Calgary: “The Hot Growth Mecca“

Pipeline by Loozrboy
Pipeline by Loozrboy

Calgary can boom and bust suddenly, said the report. Calgary’s economy is deeply connected to demand for oil and gas and that’s why it is more or less independent from the rest of the country. It isn’t as good as it seems to be. Demand can change suddenly; it is influenced by various factors, including economic performance, so there is a risk of oversupply or an overvalued market if the demand decreases. On the other hand, Calgary’s development differs from that in the rest of the country, so it isn’t included in discussions about Canada’s housing bubble.

The report added that Calgary is now waiting for the final decision about a new oil sands pipeline though Alberta into the US, as the approval could run up the market to another level. Calgary ranks third in the development as well as investment prospects following Toronto and Vancouver. It also took third place in the list of cities with the best prospects for For-Sale Homebuilding.

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