Is it a Good Idea to Buy Property in Canada Right Now?

You may have heard some people predicting a crash in the Canadian housing market during 2019, but this is unlikely to happen, and the current drop in the housing market does not necessarily mean that there are no good real estate opportunities to be had. There is a lot to think about for anyone who is thinking of investing in real estate in Canada in the near future.

It’s true that Canadian real estates prices have fallen, opening opportunities for buyers, but careful decisions still need to be made. Here is some information that can be used to help when making real estate decisions.

What will happen to the housing market?

The one thing you can definitely say about the housing market in Canada right now is that it’s uncertain. Average house prices are back to where they were in 2015, after several years of significant growth. Most experts believe that prices are likely to recover slightly during 2019, but the recovery is unlikely to be a hugely significant one.

If you are willing to invest today, and hold on to a property, until the market improves, there are certainly opportunities to be had. It’s a good time to secure property at a low cost.

The effect of interest rates

Canadian growth is currently at a low level. The last quarter of 2018 was the slowest for 2.5 years. There is concern about making sure that the economy is stimulated, in order to avoid recession. It’s also worth noting that the head of the Bank of Canada, Stephen Poloz, has said that it’s uncertain  that any interest rate rises will take place this year.

From a financial point of view this should make borrowing to fund the purchase of a home easier. However, since it was introduced in January 2018, the new mortgage stress test has made acquiring a mortgage in the country more difficult. The test means that borrowers are currently tested for ability to afford at 200 points above the contracted interest rate.

The test was introduced by The Office of the Superintendent of Financial Institutions and it has suggested that it may review the severity of the test, depending on developments in the housing market.

So, is buying a good idea?

It’s impossible to answer this question with a straight yes or no. It depends on whether you are willing to take advantage of current low property prices and wait for the market to improve, or if you can get a great deal that is going to make you money today. There is likely to be a certain amount of risk involved with property investment at this time. However, assuming that the housing market does not crash and interest rates are not raised significantly, there are definitely potential profits to be had.

Taking all of this information into account, you need to make property investment decisions that represent the best value for you, and manage risks accordingly.