How the real estate market changed in 2018 and what to expect in the New Year

With 2018 coming to an end, it’s time to look back at the Canadian real estate market and how it performed over the past twelve months. It was a busy year with new mortgage rules being implemented and the Bank of Canada (BoC) announcing three increases to the Overnight Lending Rate. Overall, the market remains relatively balanced, but it’s important to recap 2018 so you can answer any questions your clients may have in the New Year.

Recap of 2018

At the start of the year, a new mortgage stress test was introduced by the Office of the Superintendent of Financial Institutions. The new qualification rate for uninsured mortgage is based on the greater of the Bank of Canada’s 5 year Qualifying Rate (currently 5.34%) or 2% higher than the mortgage rate you were able to secure from your lender.

With a relatively strong economy, the Bank of Canada announced three interest rate hikes in 2018 with the current key interest rate sitting at 1.75%. This is the fifth time the BoC has increased rates since the summer of 2017 and the highest it’s been in a decade.

After a seven-year legal battle, the Toronto Real Estate Board lost their fight against the Competition Bureau and were forced to allow brokers to post sold homes data on their website. With this data available, Canadians will be able to make more informed decisions about real estate since they can compare housing sales.

Despite average home prices and sales dropping in the back end of 2018, real estate can still be somewhat unpredictable. The Greater Toronto Area and the Greater Vancouver area still remain hot and expensive. When you look closely at the Canadian Real Estate Association data, you’ll quickly notice that sale prices in some pockets within these cities have even gone up.

Real estate trends in Canada during 2018

Beyond the official news that happened in 2018, we also saw a lot of emerging trends across the country.

Across Canada

• Analysts believe that the Canadian real estate market will continue to cool
• An increase in private lending has occurred due to the new mortgage rules
• Canadians are optimistic about the value of their homes increasing

British Columbia

• Vancouver (West Side), Toronto (downtown), and West Vancouver come out on top as themost expensive areas in Canada
• An income of $163,000 is required to buy a home in Vancouver

Prairies

• Downtown Calgary sees an assessed value drop of $4 billion
• CMHC expects a modest recovery in housing starts in Saskatoon

Ontario

• Condo sales continue to be strong despite the overall downturn
• Some rent controls lifted by PC Government in Ontario
• Ottawa outperforming many other cities in Ontario

Quebec

• Montreal real estate on a hot streak, average home, average single-family home hits $336,000
• Quebec residential real estate market sees record sales

Maritimes

• House prices growth slows down in in Halifax
• Prince Edward Island continues to see rise in home prices

Regardless of any trends that have happened or are happening, Equitable Bank is here to help you and your clients by providing mortgage solutions. We evaluate every case individually with our mortgage broker partners directly which ensures your clients are getting the attention they deserve.

Our forecasts for 2019

Trying to predict how the Canadian real estate market will play out in 2019 is impossible. However, if interest rates continue to rise or there’s a slowdown in the Canadian economy, the real estate market could continue to cool.

Equitable Bank will always keep you up to date with the latest industry news and we’ll continue to provide your clients with innovative products that will help them reach their goals.