The Future of Everything

June 24, 2013

Canada house prices – has the market peaked?

Filed under: Uncategorized — David @ 2:37 pm

It is always hard to call the top of the market. But let’s try anyway.

Toronto house prices reached a record high in May.

At the same time, as the figure below shows, mortgage applications took a huge tumble.

This was before mortgage rates started to creep up. In April you could get a 5-year mortgage for an amazingly cheap 2.89%. That has since increased by 0.5% to 3.39%. In other words, the cost of borrowing money just increased by 17%.

Thousands of unsold condominiums will also come onto the market over the next couple of years.

Of course, this doesn’t mean a crash. Perhaps Canada will follow the path of the UK – a hefty devaluation and static house prices which slowly lose value in real terms. But over several years, it amounts to pretty much the same thing.

New mortgage applications

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