In 2019, real estate markets across Canada are expected to cool. Many would assume that this means costs will come down. But in reality, costs will continue to increase – just at a slower pace than in the past few years.
This means that affordability will continue to be a significant problem for new buyers.
The cost of homes will continue to rise faster than incomes which will put further strain on new buyer’s ability to save for a down payment. Analysts predict that the cost of owning a home will take up 79 percent of median household income by the end of 2019. This is three percent higher compared with the end of 2018 where 76 percent of income went towards home ownership.
Additionally, interest rates are expected to increase which will further erode affordability. Canada’s central bank is expected to hike interest rate up two times in 2019. This may be an issue for certain households that have high personal debt levels.
According to the Canada Mortgage and Housing Corporation, Toronto residents currently have a debt to income ratio of 208 percent. Mortgage costs account for roughly two thirds of this amount.
Regardless, sales in the GTA are expected to increase by 5.6 percent in 2019 as construction of new developments continue across the region. Meanwhile, prices are expected to increase by 0.5 percent.