Canada's Housing Bubble

Sep 23, 2010 Garry Marr business.financialpost.com

Every news release brings another indication of the shrinking Canadian real estate market.

This time out it’s the Greater Toronto Area where new home sales in August were down 45% from a year ago. That’s the bad news. The good news is new home sales in the GTA are still 28% ahead of last year’s pace after eight months.

“Last year started slow and gathered steam all year long,” said Stephen Dupuis, chief executive of the Building Industry & Land Development Association. “This year, we had a very fast start as buyers rushed to beat the HST, potential mortgage rate hikes and the new federal mortgage financing rules, and then lost steam.”

High-rise sales continue to lag compared to last year. August sales were off 33% from a year ago but still remain 78% year-to-date when compared to 2009. Condominiums continue to drive the GTA’s housing market with 48% of all new homes sales in August falling into that category.