No bubble in Toronto's condo market, RBC report says | Metro

Toronto?s condo market is booming, but that doesn?t mean it?s in a bubble, the Royal Bank of Canada says in a new report issued Tuesday.

At the same time, the fact there is no bubble doesn?t mean prices will keep rising, says Robert Hogue, senior economist at RBC. Instead, the market is expected to cool over time owing to a number of factors, Hogue says.

?The historic condominium apartment boom in the Toronto-area market is not necessarily a sign of excess or of a bubble,? Hogue writes. ?While it may not be due to a bubble bursting, nonetheless, we expect that buyer demand for condos will cool going forward.?

RBC expects the current upward pressure on home prices to ease by next year, with condo prices possibly coming down by two to seven per cent from peak to trough.

Federal officials, including Bank of Canada governor Mark Carney, have expressed concerns about over-heated parts of Canada?s real-estate market, including Toronto?s condo boom.

In contrast to Hogue, David Madani, economist at Capital Economics, forecasts a coming price decline in Canada?s real-estate market of as much as 25 per cent, with places such as Toronto and Vancouver bearing the brunt of the slide.

To be sure, condo construction is booming, the RBC report notes. Figures from the Canada Mortgage and Housing Corp. show that a record 44,100 condo and apartment units were under construction in May, 2012, with an additional 6,200 other semi-detached and row houses also going up.

Source: http://metronews.ca/news/toronto/308210/no-bubble-in-torontos-condo-market-rbc-report-says/

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