Genworth Financial, Canada’s largest private mortgage insurer, has recently released their Winter 2012 Condo Outlook report for Canada. The Canadian condo market is one of the most hotly contested topics in the market as many experts look to provide their analysis on the future of condominiums in Canada.
Genworth Financial, as a private mortgage insurer, undeniably has an obligation to both itself and to its shareholders to accurately gauge and prepare for the future of the Canadian housing market; inevitably, any time a large company with something on the line releases their predictions – it’s usually worth taking a look.
So what does Genworth foresee for the condo market?
“The outlook calls for a modest 1.2 percent increase in unit sales for 2012, while a fairly balanced sales-to-active listings ratio will hold median price growth to 2.8 per cent…”
Of course, it isn’t enough to take a look at an across the board national increase of 1.2% and arrive at conclusions on market outlooks. Genworth cites positive economic indicators, historically low interest rates and ageing demographics as the reasons for continued demand in the condo market.
“Reasonable local economies, low national interest rates, and an aging population are supportive of demand moving forward. Both gross domestic product and employment will advance in all eight of our cities except Québec City, where job counts will dip slightly following a large rise in 2011…”
Two of the most interesting condo markets are the Toronto and Vancouver areas; recent years of above average gains have made condominium prices soar in these cities. The Toronto and Vancouver markets have bolstered by their urban hubs as young professionals, families and immigrants alike have taken to these cities as their destinations of choice. Genworth’s 2012 Winter forecast has this to say about the Toronto market:
“Toronto is said to have a high volume of units under construction that will swamp the market when completed. This scenario fails to recognize that volumes of units under construction peaked in the first quarter of 2009; their annual average declined in both 2010 and 2011. New unit absorptions remain healthy, and there is evidence that rental condominiums enjoy a low vacancy rate, an encouragement to investors who buy some of these new units for rental. The area’s existing condominium market seems balanced, and last year’s 7.4 per cent annual rise in the median resale price was near the past decade’s average of 6.5 per cent.”
These facts do help to quell most of the nay-sayers; however, it is impossible to tell what the future holds. Debt loads and recent mortgage rule changes have served to turn away some potential buyers, adding further fire to those who fear a market bust. One way or another, as a potential condo buyer, it is always worth ignoring the hype from both ‘the doom-and-gloomers’ and those who push ‘buy-buy-buy’ – make your decisions based on the facts.
If you would like to read the rest of the report, or would like to read Genworth’s detailed analysis on your Canadian city, you can find the report here.
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