HOUSING MARKET LEVELING OFF, SAYS SCOTIA ECONOMICS

CREA is forecasting a record-setting year for residential real estate in Canada, but a new report from Scotia Economics says short-term cyclical factors are consistent with a gradual cooling off in Canada's housing market over the next several years. The report also says long-term fundamentals, including slower population growth, will dampen the demand for housing.
The Scotia Economics report says Canada's average annual rate of population growth is projected to slow to just 0.8 per cent over the coming decade, reflecting an aging society and historically low fertility rates.

"This less favourable demographic trend does not in itself pose a major risk to the housing outlook," said Adrienne Warren, senior economist, Scotia Economics. "Real household income growth and the level of interest rates have a statistically more significant influence on housing sales and price appreciation." But she says the expected moderation in underlying housing demand comes at a time when affordability is at a cycle low, supply conditions are becoming better balanced and pent-up demand has largely been satisfied.

"Demographic shifts will also influence the type of housing in demand," says Warren. "In particular, the changing age structure of the Canadian population and the growing significance of immigration will likely favour certain forms of housing and certain geographical areas.

Read the remainder of this article at: http://remonline.com/rem/news/newspage.aspx?pageid=1477&status=yes&top=75&catl=&cat2=

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