Like elsewhere, the cost of living in a house in Canada is on the chance since some time now. Facts and figures show that day by day, more and more Canadians are finding it greatly hard to comprehend to meet the expenses of their rents, mortgages, all sorts of property taxes, etc. And due to this reason, their net indispensable income is shrinking on a continuous basis.
Inferior Interest Rates:
One of the main factors that contribute to the rising property prices in Canada is the low interest rates set by the Bank of Canada. These low interest rates have favored more and more Canadians to invest in the property sector. In addition to this, this scenario has also attracted foreign investors from China and Russia and other parts of the world to invest massively in the real estate sector of Canada, which also has a safe economy over the past few years.
Consistent to profesionals, Canada's real estate sector is now going through a bubble, which might come to an end very soon. They suspect that the property prices in Canada will come descending up to 25% in the coming up three to four years. Having said that, economists also expect that coming to an aggressive and solid economy, Canada might not face the result of a property bubble burst that were faced by its nearby country USA.
Directly, the interest rate is set to 1% by the Bank of Canada (Central Bank) and this has earned prime focus all over Canada. If they need to find a way to abstain a huge bubble burst, the interest rate needs to be raised. But at the moment, if this happens, it will create a negative effect on better of the Canadians who are paying their mortgages. Consistent to a recent survey, if Canada increases its interest rate by only 1%, more than half of the Canadians won't be able to pay their mortgages. So, this choice isn't that simple as it might seem like. Politicians, economists, bankers, all the experts are trying to discovery an explanation for this major issue that Canada is contra now.
IMF Warning:
In a recent report from IMF, it has been projected that Canada's debt burden might advance for the next many years; with housing and buyer debts being the major contributors to it.
Similar to this report, despite the fact Canada has also been forecasted to occurrence a 2.8% rise in overall economic advancement this year, but at the same time, inflation could also rise up to unpleasant levels. Due to this, IMF has straightforwardly cautioned the Canadian procedure makers to regard a certain way the conclusion of raising the interest rates sooner instead than later.
So what is the solution for this? - Is it for the Canadians to reduce their spending on real estate sector? Or the Government to evaluate their plan of action and make necessary changes - Whatsoever it might be, it has to be before long barely to avert a situation like in USA, when this bubble came crashing down on the citizens and left too many doubts not explained till today.
Author Resource:
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