Canada's real estate market didn't fall as hard or fast as in the U.S., but some spots did suffer steep losses and a recovery will be slow as buyers worry about another potential economic dip, a new report suggests.
Total losses in value across Canada will average between 10 to 20 per cent compared to the highs of two years ago, according to the study by PricewaterhouseCoopers and the Urban Land Institute.
But some areas saw a much deeper drop. The report released Wednesday predicts a slow recovery to begin by the end of next year.
"For 2010, we are rating only fair investment outlooks for most property types and predict generally weak conditions for development," said Chris Potter of PricewaterhouseCoopers.
"Limp demand threatens to soften property cash flows across all sectors and most markets."
The report is based on surveys of more than 900 real estate investors developers, lenders, brokers and consultants in both Canada and the U.S.
It shows Canadian industry is still worried about suffering more economic shocks, particularly from the U.S. financial system.
That is despite conservative banking practices in Canada and stricter regulation that saved many Canadian investors from overleveraging during the recent housing recession.
The report forecasts a relatively stable market for developments such as condos, hotels and other developments, which will favour buyers over sellers.
The report the prospects for apartment investments rank barely above a fair rating at 5.44 out of 10, followed by office at 5.04, retail at five, industrial/distribution at 4.68 and hotels at 3.69.
"We expect to see developers curbing their activity in light of softened demand as bankers rein in construction loans," said Lori-Ann Beausoleil, also of PricewaterhouseCoopers.
She said certain condo projects will likely "stall out" until residential prices firm up in Vancouver and Toronto.
Beausoleil said Canadian office markets performed better than expected, with vacancies averaging about eight per cent, with rates much higher in cities such as Calgary where demand remain weak.
