Is it a Buyer’s or Seller’s Market in London?
Our Conclusion: London is a Seller’s Market
In London, we can see that it is indeed a seller’s market. MLS sales in London are on pace to grow to pre-recession levels in 2015 and will grow again in 2016. The tighter resale market (due to spike in demand) will lead to greater growth in the average MLS sale price than in 2015 (2.5%). It is also shown that existing home sales are expected to grow more than new listings. The greatest price growth in 2016 will be in the first half of the year as sales grow and new listings remain stable. These new listings will not grow until the second half of 2016 in reaction to greater price growth earlier in the year. To counteract this spike in demand, slightly higher mortgage rates (growth of 1.5%) will lead to slower growth in MLS sales. As a result, the market for resale homes will favour sellers.
The Effect of Migration
Migration is expected to be more supportive of housing demand in 2016 than in 2015. This is largely due to new immigrants coming to Canada and settling within London. Historically in London, changes in net international migration six years ago have a significant effect on MLS sales in the current year. Usually after 6–10 years in Canada, there is an increase in home ownership rate of immigrant households in London. Due to the strong growth of migration in 2009–2010, this will lead to high sales in 2016.
How does this impact buyers?
For buyers, what does this mean? It means that your home search could take longer than expected.
Due to the increased number of buyers, competition has rose dramatically and it is now harder than ever to secure the dream home of your choice.
Real estate agents can help you through these difficult market conditions. They can assist you with developing a viewing plan (to go see homes not on peak hours), assist you with securing your finances (putting down an offer that takes a few days to finance rather than a week or longer), and assist you with the negotiation of the home price (using a home inspection as a crucial tool).
Demand for housing is finally beginning to recover since the recession. As demand is growing, prices of homes will also rise, and mortgage rates are now seeing growth. Migration has a significant effect on this demand and this demand will be realized in 2016. Real estate agents can assist you through these tough market conditions. The market is competitive, but if paired with the right agent, the search will be smoother.
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