canadian_critic

I have no idea what the Toronto market is like, but the weakness of the pound / strength of the dollar should encourage you to bring out as little as possible at this point. I've read some responses here where realtor's appear to be scaremongering, but then realtors make a fortune every time you buy and/or sell. No matter how ethical they seem, the are motivated by factors which are not necessarily in your best interests.

I recommend you rent and bring as little money out as possible. The rate has been even weaker but it's really unlikely to drop much (making it weaker on the pound). It's quite likely to creep up making your pound more valuable. The market is probably bottoming out, so you'd purely be at the mercy of foreign currency gains which is an uncomfortable position.

I bought when the price had fallen to 2 to the pound after it was 2.50 or so for a long time. I felt gutted. However the housing market was active then and the currency was much more active. I've done quite well considering but I sold my home so as to not have a financial noose as I have little confidence in prices in BC, which are largely influenced by asian investors. Toronto is likely to be softer still, so just don't risk it and don't burn you bridges to UK either.

All the best for you and your family

Novocastrian

So, to paraphrase, you have no idea.

London Mike

zae

Thanks.
Yes the exchange rates is yet another consideration – we’d love to have had a 2 to 1 (CAD:GBP) exchange rate, but that seems highly unlikely in the near future – Canada seems to be the one country in the world to be bucking the recent (and continuing) economic downturn. So yet another reason to consider renting.

johnh009

Yes, I would say that the job market is the most important factor. Look at the UK, there is 24% youth unemployment. Surely, these are the people who should be entering the market at the lower end and creating that knock-on effect.

London Mike

Saw my financial advisor yesterday and she backed up what many have said to me - absolutely no short or medium term likelihood of the exchange rate shifting. The Cdn dollar is booming however. Maybe time to change some over and doing some investing in Cdn $$ ... Think that's what we'll do.

TheBear

Hi Zae,

We are in a very similar position (except for kids!). I have just been made an offer by a Canadian company to start in August. I get 2 months rent paid for, at the end of which I'd like to buy. I've been watching the Toronto market and the currency markets for years and it has been horrible watching Sterling tank and house prices run away in the GTA, and therefore seen my purchasing power being eroded.

With regard to Sterling...it may go back up to $2.00, but I don't think that's going to happen any time soon, and if it does it might be short lived. The BOE is no longer targetting inflation, and has no intention of raising rates (Canada will be raising very soon). The UK economy has its best years behind it now that North Sea Oil is on the decline and other countries will start to out-compete in the financial services sector. Canada may suffer another downturn due to the excessive levels of personal debt when rates rise, but in the long term it has lots of stuff in the ground that the world needs, and this will ensure that the Canadian currency will probably stay strong.

With regard to housing, I read this blog every day: http://www.greaterfool.ca/

He is an uber-bear when it comes to housing. I think he's absolutely on the money when it comes to Vancouver, and to an extent I agree with him on the GTA, but even from his ultra bearish viewpoint he sees the GTA only adjusting by 15-20% with a long period of stagnation. If rates start climbing quickly, and you miss out on a cheap fix, you may end up giving the bank in interest what you would have lost in real estate by buying now. That's what I figure anyway (interest rates could rise by as much as 4%, if you have a 5 year fix at today's rate, and your property falls 20%, you won't have lost out, and if you stay in the house 10 years, you'll get the money back and have had a home all that time).

For me it will be a case of if I see a house I love, in an area that I like, and I can easily afford the repayments without too much stress, then I'll buy and stop reading blogs about property prices. If I don't see something that I perceive as good value, then I'll rent like I have done in the UK for the past 5 years. My preference is to buy so I can start my 10 year mortgage free plan though (could never do that in the UK!).

Project_Habbakuk

I have been reading this thread with interest. Well remember the crash of 90-92 when prices dropped like a proverbial brick in TO (preceeded by an even bigger crash in Vancouver some years previously) and the eventual fall-out from that took many, many years to recover.

I would recommend any new immigrants to Canada (especially the TO area and Vancouver) to rent for a good period and get their firm grounding/complete thorough research before making the huge commitment that buying a house involves. Especially condos. When you do that, keep the salary multiple low and put in a generous down-payment so that you can cushion any falls. For what it's worth, my expectations are for the market to fall 25-30% (maybe more in the more leveraged places) in line with the drops in the US and UK. Canada is not isolated from the Western economic fundamentals.

Nelju

I doubt cities like Toronto receiving 100 000 immigrants a year decrease significantly its property prices. The demand for housing is going to be there for sure. Toronto is probably one of the strongest markets in the world right now for projets and construccion, so my bet is the people involved on those projects is not forecasting any significant drop in the near future.

Check this link out. It is a good place to take the pulse to construction sector and urban issues in Toronto.

http://urbantoronto.ca/forum/forumdi...nto-Discussion

Project_Habbakuk

Beware vested interests !

TheBear

I think your advise is very prudent. I am looking twice my income alone (not my wife's) and 25% down, then I don't give a cr@p if prices go down. If I can't get something for that, I'll rent. Condos are a disaster waiting to happen...overpriced little boxes, high yearly costs. For me it's a case of buying a less desirable 20-30 year old house that has seen better days in an area that isn't "hot", doing it up, enjoying it, then hopefully not loosing when I sell. Not worried about profitting, just want a home.

HSJones

I hope so!

Pendonk

If the bubble does burst how much do you think prices will drop by and over what period? It's not gonna drop by a massive amount over night, more likea few % over a year, or even years. How much will you spend on rent in that time?

If you want to buy, buy. It wont make a whole lot of difference in the long run.

Steve_P

Is the Toronto/Canadian housing bubble about to burst?

Maybe if the linked article is to be believed. http://www.calgaryherald.com/news/Ca...665/story.html

zae

Thanks for your input - I read the blog (http://www.greaterfool.ca/) with interest. It would appear that it is widely anticipated that if there is indeed a correction it will be around the 20% mark. One would certainly hope not to loose 20% of the value of a property soon after purchasing it - not at all good starting out with negative equity. So like you - it would be a question of renting... and wait and see (while using the opportunity to get a good feel for the 'right' property at hopefully the 'right' price).