For first-time home buyers, price is a critical factor, and in places like Canada prices are looking very attractive right now. Although Canada has a first-time home buyers tax credit, it is much lower than in the US (it is calculated by multiplying your tax rate by $5,000 according to the Canada Revenue Agency) so it is typically a less important incentive than low prices or interest rates. If first-time buyers think prices are near the bottom, could their entrance into the market help turnaround Canada’s real estate market? For more on this see the following article from Property Wire.
Residential property prices in Canada are continuing to fall but the result is that more first time buyers are entering the real estate market, pushing up sales.
The latest real estate figures to be published show that Canadian home prices fell 5.8% in March from the same month a year earlier. This was a faster pace of decline than in February, says the Teranet-National Bank National Composite House Price Index.
The index, which measures the rate of change of prices for single family homes in six metropolitan areas, also showed prices were down 8.5% nationally from their peak in August last year.
Western Canadian home prices were hardest hit, with Vancouver leading with a 9.6% decline in March from a year earlier, while Calgary had an 8.4% drop, Toronto a 6.9% slide and Halifax the smallest fall at 0.8%. Montreal and Ottawa bucked the trend in March, rising 2.9% and 1%, respectively. The index also showed that property prices sagged 4.1% year-over-year in February.
While the economy remains a huge concern, lower prices and interest rates are spurring first time buyers into the market place, according to a report by Royal LePage Real Estate Services.
According to a poll by Pollara Research, done for Royal LePage, 86% of Canadians say lower interest rates make them more likely to buy a home and 81% say lower prices are another motivating factor.
But the economy remains a stumbling block, with 76% citing job security and 64% saying a stable economy are important factors in their buying decisions.
‘The true impact of job loss is understated because, beyond the 8% unemployment rate, you have a section of the population who are concerned about their jobs, and that is feeding into their choice to buy a home,’ said Phil Soper, Royal LePage CEO.
However, first time buyers are returning, helped by homebuyer’s tax credit and a home renovation tax credit for 2009.
And so far Canadian developers have avoided a disastrous spring, with new home sales down by just 26% in April compared with last year, less than was expected.
This article has been reposted from Property Wire. View the article on Property Wire’s international real estate news website here.