Residential property prices in Canada could soar by as much as 9.3% in 2012, says The Canadian Real Estate Association, as international buyers and a strong domestic economy keep the market busy.
But this is just business as usual. The news comes on the back of several boom years for the Canadian home market. In the year to the end of June 2011, the National House Price Index rose by 4.52% according to the National Bank of Canada – Teranet.
And there were similar price jumps in 2009 and 2010. Richard Way, editor of http://www.OverseasGuidesCompany.com, told OPP this week that “compared to its nearest neighbour, the U.S., Canada has performed tremendously well over the last 3 years. Across the board house prices are increasing and rental yields are up with Montreal being by far the most successful with rental yields averaging at 5.7%.”
However, “market-calming measures” are now starting to appear in Canada. One of the sost significant is the country’s new “Harmonised Sales Tax” which has been implemented in Ontario and British Columbia. “New houses in Ontario are now subject to an additional 5% sales tax on top of the existing provisional sales tax of 8% and British Columbia will also face an additional 5% on top of its current 7% standard tax,” explains Way.
“Furthermore since April 2010 Canada has had a far more stringent approach to mortgage lending making it harder for borrowers to qualify for what were once easily achieved mortgages.”