As the new year approaches, it would also bring in a new set of hurdles that the housing market has to go with. Here is the forecast for the housing market and challenges it might face in 2019
Low Land availability
A new study by Ontario homebuilding industry warns about the lack of available land for new homes to be built. This lack of availability of land might drive the prices up in the future.
According to Globalnews.ca article and a study report by Neptis, there are 50,810 hectares of unbuilt and available in the Greater Toronto-Hamilton Area, for a total of 125,560 hectares in Greater Golden Horseshoe.
This might be become a huge problem to tackle in the upcoming years because of population intensification and the less availability of land.
Tight Rental Space
In the month of November, the Ontario government announced the rent control legislation would no longer apply to the new housing units that are being added to the rental space.
As the rent control would discourage developers from starting new rental built projects. The biggest problem would be the lack of purpose built and rented condo units during the times when more people are looking for rental spaces. As the country’s policies for immigration are being flexible and with the increase in inflow of immigrants the need for more rental spaces has been on rise and there might not be enough spaces available.
According to Ben Myers of Bullpen research and consulting, the bigger problem facing the province is the lack of rented condos units. He wrote” This change won’t significantly move the needle on new purpose built rental supply. If I had to put a number on it, I’d say we’ll get 500 to 1,00 more rental apartment starts per year because of the elimination of rent contra over the next 5 years”.
Increasing Interest Rates
The home sales in GTA were down by 1.1% month on month in October, which shows the start of slower sales period for the market. The sales prices in Greater Toronto rose by 1% in October whereas the new listings retreated by around 3% in the region.
The reason is higher mortgage rates which are impacting the budgets of new home buyers. Signs show that the hike in the interest rates would seem to continue even in 2019.
First time home buyers should keep these things in mind while looking out for new options and for people who are looking for a place to rent.