Economy of Canada
Economy of Ontario
Canadian Real Estate Market Overview

 


Economy of Canada highlights

  • Canada has the tenth largest economy in the world and is one of the world's wealthiest nations.
  • Canada emerged from the recession in 2009, and has had the best recovery in the G7
  • Canada leads all G7 countries in ease of doing business, according to the 2009 IMD World Competitiveness Yearbook.
  • Canada has invested billions of dollars over the last decade to create a robust research and development (R&D) climate that is second to none.
  • The unemployment rate decreased from 8.7% in August 2009 to 7.9% in June 2010 and now to 7.2% in July 2011.


International trade makes up a large part of the Canadian economy, particularly of its natural resources. The United States is by far its largest trading partner, accounting for about 73% of exports and 63% of imports as of 2009.
Contrary to the American financial institutions, the Canadian banks are well capitalized and poised to take advantage of opportunities that American and European banks cannot seize. Canadian banks have remained profitable, outperforming their peers, because of tighter government restrictions on lending and capital requirements.
In 2008, the Royal Bank of Canada (RBC) was the single Canadian firm among the top 10 largest banks in North – America. A year after not only the RBC became the seventh biggest after tripling its assets, but three other Canadian institutions escalated their way to the top 10 – Toronto – Dominion Bank, Bank of Nova - Scotia and Bank of Montreal.
What lays in the basis of this turnaround is that over the past 15 years, as the United States and Europe loosened regulations on their financial industries, the Canadians kept on seeing the old rules as useful shock absorbers. Canadian banks are generally leveraged at 18 to 1—compared with U.S. banks at 26 to 1 and European banks at 61 to 1. This mostly reflects that not only Canada’s banking system is driven by old-fashioned rules, but the Canadian business culture is mainly risk-averse in its core.

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Economy of Ontario

The economy of Ontario is a rich, diversified economy. Ontario is the largest economy in Canada, its GDP being nearly twice that of Quebec, which is the second largest economy. The Ontarian economy is highly influenced, and run by the service sector, though manufacturing also plays an important role.
Ontario is the most populous province of Canada, with a population of about 12.5 million permanent residents. It is Canada's leading manufacturing province accounting for 42% of exported goods.
Southern Ontario, with its proximity to the enormous U.S. market, is heavily industrialized. Ontario's highly diversified economy offers excellent opportunities in all sectors ranging from automotive, plastics, aerospace to information and telecommunications technology and the life sciences.

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Canadian Real Estate Market Overview

According to different professional sources, the housing starts will stabilize over the next two years.

During the last decade we witnessed a steep growth in the real estate prices together with a drop in the mortgages’ interest rates. The assumption is that the market now is very close to its peak, and we will probably see a total of no more than 5.5-6% rise in sale prices by the end of 2010. The forecast for national home sales activity for 2011 is a decline of approximately 7.1%.

Chart no. 1

As shown in chart no. 1, while the mortgage interest rates were fluctuating during the last decade, the housing sale prices kept on escalating in the Toronto area. However, the growth was relatively balanced and conservative. In fact, the total increase was approximately 60%, with prices going up from $ 250,000 to

$ 400,000.

With interest rates soon expected to rise again combined with recent prices’ increase and the HST, Canada is believed to be entering a typical demand-driven decline.

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