Canadian Housing Boom Over?

May 28, 2008

“The Canadian housing boom was declared officially over”

The Financial Post reported on Thursday, April 17, 2008:

“Canada’s six-year housing market boom is officially over,” said Douglas Porter, deputy chief economist at BMO Capital Markets. Average prices rose just 5.5% to $327,620 in the first quarter over the first quarter of 2007, the smallest price increase since the fourth quarter of 2001. Employment, the key driver of housing sales, is still strong and Canada did not indulge in nearly the same amount of high-risk sub-prime mortgage lending as the United States.

Much of the building has been catch-up from the long housing slump Canada went through from December, 1989, to September, 1998. Ongoing turmoil in the international credit markets have not left Canadian banks unscathed. Many economists expect the Bank of Canada to cut rates another half a percentage point on Tuesday, perhaps invigorating the spring selling season, which could prove to be the key test for the Canadian housing market going forward.

Click here to read the full report.

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