A recent report has placed Canada among only six other advanced countries that have posted gains in their housing sectors. But that growth has largely been the result of monetary stimulus that will slowly be siphoned off next year.
Canada’s housing market is still performing better than many of its counterparts, most notably the U.S., but the market still remains quite volatile, according to the Global Real Estate Trends report issued by Scotia Economics Dec. 23.
And while home prices on average were 5% above those in 2009, most of that price growth took place in the first quarter. Average inflation-adjusted home price appreciation rose 16.6% in the first quarter, but dropped to 1.5% in the third.
Scotia Economics expects Canada’s historically low interest rates, which will most likely continue until mid-2011, will be an “extremely powerful inducement” for both first-time and move-up buyers and should lead to a “decent level of sales.”
But there is a significant risk that the market will falter in 2012 when interest rates rise and home prices hit their peak.
Job creation could also be sluggish going into 2011. Over the past year, public-sector hiring has made up a third of all the newly create jobs in Canada, according to Scotia Economics.
Given austerity measures being carried out in other Western countries, Canada may not be too far behind. Britain, where half a million public-sector employs will be laid off, commenced its rigorous cuts to social programs with a total public debt of roughly £1.7 trillion pounds, or more than £27,000 per capita, according to the Economist global debt clock. Canada’s total public debt stands at roughly $1.3 trillion, or more than $37,000.
Former Prime Minister Jean Chretien embraced austerity in the early 1990s when he took over a government plagued with deficits left by his predecessor.
Roughly 40,000 public sector jobs were cut and federal spending was reduced by 20%.
Canada’s housing market is still performing better than many of its counterparts, most notably the U.S., but the market still remains quite volatile, according to the Global Real Estate Trends report issued by Scotia Economics Dec. 23.
And while home prices on average were 5% above those in 2009, most of that price growth took place in the first quarter. Average inflation-adjusted home price appreciation rose 16.6% in the first quarter, but dropped to 1.5% in the third.
Scotia Economics expects Canada’s historically low interest rates, which will most likely continue until mid-2011, will be an “extremely powerful inducement” for both first-time and move-up buyers and should lead to a “decent level of sales.”
But there is a significant risk that the market will falter in 2012 when interest rates rise and home prices hit their peak.
Job creation could also be sluggish going into 2011. Over the past year, public-sector hiring has made up a third of all the newly create jobs in Canada, according to Scotia Economics.
Given austerity measures being carried out in other Western countries, Canada may not be too far behind. Britain, where half a million public-sector employs will be laid off, commenced its rigorous cuts to social programs with a total public debt of roughly £1.7 trillion pounds, or more than £27,000 per capita, according to the Economist global debt clock. Canada’s total public debt stands at roughly $1.3 trillion, or more than $37,000.
Former Prime Minister Jean Chretien embraced austerity in the early 1990s when he took over a government plagued with deficits left by his predecessor.
Roughly 40,000 public sector jobs were cut and federal spending was reduced by 20%.
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