The Detached Market in Calgary in Review

The Calgary Real Estate Board has released the December statistics package so I thought this would give me a good opportunity to review the year in real estate with you. 

Sales of detached homes in 2018 were the lowest they have been in over a decade with 9,945 homes changing ownership - the only year we were under the 10,000 sales ceiling. On the bright side, we are hoovering just below the average for new listings. Although we have been on a steady incline for the past three years, as we can see in the second graph below, we are somewhat below levels in 2008, 2011 and 2012, three of the toughest years we have seen in the past decade:

Looking at the inventory (in blue below) and sales (in green) we can see the ratio between the two is quite high. As that differential expands, typically pricing (in red) drops off considerably. We can also see in the second graph that supply is trending upward and is at a critical level, the highest it has been in five years.

All three price indicators - Benchmark, Median and Average prices – are the lowest they have been in the past four years. This is the highest inventory level we have brought into a new year in the past four, in combination with the lowest sales figures in that same period of time:

Here is a look at the detached market since 2005. As inventory levels rise, typically prices trend downward. We can also see that inventory levels usually increase from the beginning of the year to mid-year with a few exceptions. The inventory level is certainly trending upward, we may very well see a further glut in inventory this year as we move towards spring and early summer:

The numbers are certainly not looking very good heading into 2019, I do hope we are getting close to the bottom and we can see some gains shortly. I suspect we will see subtle (and maybe some not-so-subtle) changes in a variety of extraneous circumstances to the market such as slight changes to mortgage qualification, this is an interesting article in the Globe and Mail from last week. We have seen six mortgage rate increases in the past couple of years as well as qualification changes in October 2016 for insured mortgages, then again last January where all qualification rules were amalgamated regardless of the mortgage portion of a sale. It is tougher to get into the market as a first time home buyer, and that is certainly adding to the sluggish sales numbers. Perhaps some of these anticipating tweaks will set us on a more balanced course.

With all Calgary sales categories down over 20% this past year, I would imagine mortgage brokers - as well as any other real estate professionals - have seen a big financial hit in the past five years, and especially this past year. Although new home builds are not necessarily included in our MLS statistics, we will find that Builders are also seeing a similar decline in sales. I suspect we may see some builders, Real Estate Brokerages and mortgagors take a serious look at their future viability as they feel the financial pinch. It was the end of 2016 that we saw Reid Built go belly up and what a fiasco that still is! I suspect there are many companies, builders and support services that may be dealing with insolvency if we don’t see improvement in the industry early in the year.

There were some exceptional sales this year, 49 detached homes sold over a million dollars in metro Calgary. Here is a look at a few of those:

• 4328 Britannia Drive was originally listed for $5.95 million in 2013 and was on and off the market for 1,112 days, selling for $3,599,000 in early November;
• 3411 Ninth Street SW in Elbow Park sold at the end of November for $3,488,000. The seller purchased this in December 2011 for $5.05 million;
• 234 Discovery Ridge Terrace was purchased for $2.05 million in 2008 and sold in mid-November for $1,898,000;
• 126 37^th Street NW was originally listed for $1.85 million in March and sold after 232 days on the market for $1,550,000.

One of the most amazing sales to me was this one also in Britannia, it sold in February for $3,180,000. It was purchased in 2012 for $6 million, wow!

Not all of the upper echelon saw such dramatic drops in price or value. I would say, though, that many affluent buyers in this price category are taking advantage of the lacklustre market and securing some beautiful properties in anticipation of values eventually returning to values of the past. Maybe they know something we don’t know!

Regardless of the slow market, there still are buyers that are looking for a new home. Some folks are upsizing as new members are added to their families, some are looking to purchase after renting for a period of time, there are new folks coming to Calgary all the time and there are some folks looking to down size or “right size”. What IS important in such a volatile market is to have the facts so that one can make well-informed, well-researched decisions whether they are considering buying or selling.

If you are considering buying, selling or investing in real estate, let me put my experience and expertise to work for you.

The Calgary Housing Market Moving Forward

“Elevated inventory levels compared to sales are causing prices to ease further in Calgary’s housing market” CREB November 1^st, 2018.

As with any change in the real estate market – whether upward or downward – there are great opportunities for both Buyers and Sellers. We have been infiltrated with negative news for many months, and often it does seem that there is no end in sight. Here is an analysis of the market today and insight into where I feel it is heading over the next few weeks, months and years. Although at the onslaught it may seem negative and dismal, there will be many opportunities, especially if you are considering changing your current real estate position. Upsizing, downsizing or right-sizing, there is plenty of room for growth.  

Total sales across Calgary are at the lowest levels in over ten years, as a matter of fact, sales of detached homes in the city are at the lowest we have seen since the late 1990’s. Consider the population in the late 90’s had not yet reached a million, while today we are estimated at around 1.3 million! Adding to this issue is the increase in new listings. Although we have seen an “easing” of new listings over the past few months, we are still at the highest we have seen since 2014, prior to the oil price fiasco.

Looking a little closer at the inventory, we can see the ratio between the inventory and sales is still quite high. Although it looks like the ratio has been easing a bit since June, a lot of that has to do with listings being taken off the market rather than actual sales figures. Since the beginning of September there have been 4,477 listings taken off of the market across Calgary. Although many have been “re-listed”, there are still a significant portion that have stayed out of the listing pool since then. In that same period of time there have been 3,107 sales.

I have concerns regarding some of this inventory coming back onto the market early next year that was listed in the recent past, and the possibility of that coming back at a lower price point than it was when it was previously listed. In the second graph we can see that inventory has been trending up for the past five years. That, in combination with the possibility of the relisted homes returning, could point to some trying times in 2019. Many owners that are considering their selling options look very carefully at the spring market, as that is seasonally the most robust sales period of the year. Looking at the sales portion (in green) of the graph above certainly shows that was true this year. There was a steady climb in sales from January to June, sales have eased off month by month since then. In the same graph we can also see that inventory increased significantly in that same period of time, and at an accelerated rate in comparison to the sales figures.

Taking a longer view of the market and what has happened in the market since the craziness in 2006/2007 when inventory was extremely low and demand peaked due to a large influx of new Calgarians from the rest of Canada and abroad, we can see prices jumped considerably. We can also see the continuous downward trend of price change since the oil price fiasco in late 2014. Our inventory trend is also climbing and although not at the highs we saw in late 2008, we certainly seem to be heading in that direction.

For prices to go up, we need a variety of things to happen in Calgary. To start, low oil prices in the past few weeks and the brutal price differential for our Alberta oil is taking its toll on the economy across Alberta, and especially in Calgary. The potential development of pipelines to take our oil to the coast and the international market is taking a kicking, and that is something that we need to help us on the world stage. Although we are hearing that things are getting better in that industry, the low prices since 2015 have certainly slowed exploration and the potential for more employment in Calgary and the rest of the province.

I was recently in conversation with a recruiter for a medium oil company and was told they are currently looking for quite a few full time employees, she also mentioned that many of her colleagues in other companies are in the same boat. I asked if they are finding employees from outside of Calgary and she said most have been unemployed locally for some time, or are looking to move from another local company to reposition themselves. I think this is a good start and shows that things are perhaps improving in that industry, the question is when are we going to start pulling from the national or international pool and have a significant in-migration to the city again.

Secondly, our unemployment figures are still teetering around the 10% level in the City. Our city core is close to a third empty and more commercial space will be coming online shortly as they finish up the Telus Sky, which will be the 13^th tallest building in Canada with 60 floors. The top 28 floors will be more residential space. City Council is trying to figure out how they are going to make up for the decline in down town property taxes and are looking at business in the suburbs to make up the difference.

Interest rates have gone up six times since July 2017 adding further turmoil to the real estate market, especially for first-time homebuyers. That, in combination with a stricter qualification process for new mortgages put in place the past couple of years, has also taken its toll on the market. All of this has contributed to the fact our net in-migration has been sluggish and in negative territory since 2015, although there are signs this is easing up and looks like we could possibly be heading into positive territory, although not in the numbers we have seen prior to 2015. Add to the mix the uncertainty of where our property taxes are going, many potential buyers – whether they are new to the city, or someone considering a new move – are opting to hold back to see what happens. The real estate market is driven by “urgency”, I need to buy this before prices go up, someone else buys it, etc....that urgency is also in a lull.

City Counsel has also approved 12 new communities across the city, something we have not seen since Nenshi has become our Mayor, one of his early mandates was to stop “urban sprawl”. I think their intent here is to improve the tax base, but I wonder where the new homeowners are going to come from? “If you build it, they will come”?

So taking all of this into account, one needs to wonder “why” the coming year will be better than the past few years as far as sales and urgency. These doldrums will turn around, the million dollar question is when that will be? I contend that we are talking many months, possibly years before we see positive gains in real estate. If something profound happens in the oil industry, or a fabulous new industry comes to the City, all this will change around and we will start to travel upward again. I expect further devaluation in property values for a significant amount of time, I would suggest it could take at least two years to come back to the values we have today. If we only see downward price adjustments for the next couple of years, it will take at least the same amount of time to increase to where we are today from that point.

So what is the take away from all of this information?

As a Seller, one needs to be running on all cylinders right out of the gate. A property has to be priced aggressively. That does not mean “underpriced” or priced below market value, but to be priced as close to the potential value today. The property also has to show well, both online and when someone visits and views the home. We are in a beauty contest as well as a price war to some degree. Keeping a close eye on the market in your area is also key once you are on the market to be aware of any subtle changes in the local market. What this information means is paramount, and your professional real estate advisor can provide prudent insight into those numbers.

As a Buyer, there are many choices with an abundance of inventory. Some – but not all – sellers will be more flexible in such a market. Sellers are often priced aggressively right off the bat and prices have eased over the past few years. Being aggressive and pro-active when new properties come up that meet most of your search criteria is also important as there are many interesting and well-valued homes that come on the market and are sold relatively quickly. Interest rates are creeping up, and we anticipate further increases in the coming year. It is a great time to take advantage of lower rates, which contribute to your affordability.

Regardless of whether you are a potential buyer or seller, information is key and what it actually means is most valuable. Having solid in-depth analysis and strategic insight to go along with this information will help you make an informative and well educated decision in moving forward on your real estate journey.

Calgary Real Estate Market in early 2018

We are off to an interesting start for the first two months of 2018. With the third interest rate hike in six months in mid-January and the change in the qualification process of non-insured mortgages, it was to be expected that we would see a slow start to the year. Chillier weather along with lots of snow may have also impeded sales for the early part of the year.

Although sales of all residential properties in metro-Calgary was down 11% compared to last year for properties under a million dollars, we actually saw a significant increase in sales of homes over that million dollar threshold to the tune of 45%! Combining all property sales in all price categories, year over year we saw a 10% decrease in sales for the first two months of this year:

Lifestyles of the rich and famous?

Taking a closer look at the higher end homes may give us a better prospective of what is actually happening in that sector. The highest sale so far this year was a beautiful home in Britannia that sold for $3.18 million toward the end of February. This home was originally listed at the end of 2015 for $5,995,000 and was on the market for 788 days before they found a new owner. The sellers purchased this in 2012 for a whopping six million dollars. Wow, that is a heck of a loss!

The second highest sale was in Elbow Park. It was originally listed in September 2016 for $3.7 million, they were on the market a total of 388 days and sold for three million dollars. This home was purchased in September 2017 for $3,733,050!

The third highest sale was only on the market 18 days, a bit out of the norm for this price category, originally asking $3.15 million. They sold $257,500 (-8%) below list for $2,892,500.

The fourth highest sale was also in Elbow Park and was on the market for 260 days, originally looking for $3,099,000 and selling for $2.85 million this year. This home was purchased in 2012 for $2.95 million.

And in the fifth spot is this bungalow in Briar Hill. It was on the market for 301 days, originally listing for $2.888 million and selling for $2.4 million. They also listed this home for 301 days in 2013/14 for $3.15 million.

So although on the outset it would seem that folks selling the elite homes in Calgary are seeing an increase in activity, perhaps what we are actually seeing are high-budget buyers taking advantage of a slower, receding market. Granted not all of the 77 sales of homes in this price category are seeing these crushing decreases in value, but it is interesting to see that those five homes sold considerably below their original expectations.  

The rest of the detached market...

When we dip below this threshold and look at homes between $600k and that million dollar mark, we can see that sales for detached homes are down 23% from the pace we set last year. I think this is a significant price category that may very well affect other home sales in lower categories. We want to keep an eye on inventory levels in relation to sales. If we see a significant increase in listings, we risk a deterioration in pricing as sellers compete with one another for a potential buyer.

From February 1st to March 5th about 460 new (or re-listed) homes came onto the market in this price category, about 41% of the current inventory of 1,125 homes. In February there were 134 sales and January there were 105 sales, obviously new listings are far out-pacing sales. Perhaps this increase in the inventory are sellers that are trying to get a jump on the spring market. If new listings slow and the pool of buyers increases as we head toward better weather, perhaps everything will even itself out.

The bulk of our detached sales in metro Calgary are between $400k and $600k. So far this year they account for just over half of our sales. Year over year transactions are down 14%, from 739 last year to 638 this year. Almost half of the current 1,837 listings have been added since the beginning of February.

We are at an interesting crossroads here, hoping the buyer pool becomes more robust as we get closer to the spring market. As per usual our Alberta real estate market is full of intrigue and uncertainty.

Looking Forward to 2018

2017 was a very interesting year in Alberta. It would seem that our economy is back on the upswing, oil prices are on the rebound and our future is so bright, we gotta wear shades… it seems those rose coloured glasses are being worn by most economists. I do hope they're right and look forward to an awesome year as well!

Before we do that, though, let’s have a closer look at how real estate fared this past year in Calgary. For, perhaps, some insight into the coming year.

The first half of 2017...

We were off to a good start in early 2017 with 12% more sales in the first six months compared to the prior year. Those numbers were looking very promising and many were predicting that we were finally moving out of the lacklustre sales period following the oil price collapse in late 2014. In that year, prior to the oil fiasco, our sales were the best in many years and very similar to our peak numbers in 2007.

In 2015, we saw a decrease of 26% in sales compared to the first six months of that prior record breaking year. 2016 also saw falling sales, dipping 10% below sales figures from the year before, and well below (a 34% decrease) compared to 2014. Although the numbers were looking good in the first half of last year, keep in mind the fact we were comparing them to two very troubling years. If we look back to the first half of 2014 and compare it to our “great” start to 2017, we were still 26% below that landmark sales period.

The rest of the year...

In the latter half of 2017 we saw three major events that deeply effected the real estate market in Calgary and all of Alberta. The first event was an increase in the Bank of Canada interest rate in mid-July. We typically see a sales decrease when we get into the summer months, however, a good portion of the 24% decrease in sales from June to July had to do with this rate increase. In the three years prior to 2017 rates decreased between 9 -14% from June to July.  The second rate increase was early September where there was a decrease in sales from August by 8%.

The third major event is the change in the mortgage qualification rules set by the Bank of Canada. The new rules, which were implemented on January 1^st, 2018, essentially dictate that all mortgagees must qualify 2% above the posted Bank of Canada prime rate, which currently is 3.2%. What that means is about a 20% decrease in buying power for those that wish to put 20% down on a home. A similar policy was put into place in October 2016 for all insured mortgages (those where less that 20% was put down by the mortgagee). This had a major effect on sales in the market in October of that year, where we saw a spike in sales that month when folks were trying to get into the market under the old rules.

Although we saw a decent sales month this past December – 8% above last years sales and 5% above the average sales figures from the prior three years – we did not see the significant sales jump that we did when the policy changed for insured mortgages two years ago.

This change in policy will certainly effect the affordability of those looking for a new home and wanting to put 20% down on the purchase. I would suggest that perhaps a portion of those buyers may decide to put less down and qualify for a higher insured mortgage, taking some of the pressure off of the downward trend in affordability. 

The first six months of this year will be crucial in seeing how the new policy affects sales and values, and how that portion of the market (conventional mortgages) reacts to the changes.

A volatile 2017...

Real Estate values have also fluctuated dramatically over this past year. The average sales price in Metro Calgary in December was $451,587, the lowest it has been since January 2013. The silver lining to that is the fact the highest average sales price in Metro Calgary – ever – were in May ($504,230) and June ($500,889). These have been the only two times we have surpassed that half a million dollar threshold. That 10% decline in average value between May and December is one of the most volatile in the past few decades as well. 

What will 2018 bring?

Inventory levels are on the increase, there were 15% more listings this December compared to last year and one of the highest inventories that we have seen in a decade. 

Sellers will need to be well aware of the market and any nuances that may effect values to maximize their equity position. There are many extraneous variables that may effect the market over the next year such as the net migration of new folks moving to Calgary, the employment rate and - of course - the price of oil. Average values will most likely deteriorate as we move through 2018 and adjust to the new mortgage rules, however, there are still exceptions to the "average". Being cognizant of the market and aware of how a property is presented and marketed will be prime components of how successful one is in the coming market.

How the Mortgage Rule Changes will affect the market

My thoughts on the new mortgage rules and how they most likely will play out... Although the qualification process will not directly affect those purchasing with cash, that is a very small percentage of the buying pool, most buyers have some sort of a mortgage or loan on a property they are purchasing.

From now until the end of December we will most likely see a bit of a frenzy in sales, especially for those buyers that have been sitting on the fence waiting to “see what happens” in the market. As of the beginning of 2018, those new rules will make a huge change in transactions. I predict sales will be down for the entire year. (Thanks Ram Sund for this image!)

Overnight, most buyers purchasing power will drop about 20%!! The question is how that will affect the value of properties in the beginning of the year. I would suggest that values will not drop 20% overnight, but will see a steady decline for the first few weeks and months of the year. It will take much longer for the change to make a big difference in pricing. What WILL happen is a huge drop in the number of sales. First off, January, February and often March typically see a lower number of sales due to the season and the inclement weather associated with deep winter. So the seasonal slow down along with the new mortgage process will grind sales figures even further.

Normally, we see an increase in sales when the weather turns to spring (whenever that may be!) and the bulk of our sales are from late spring to early summer. This is prime time for sales and how we do in that short period of time will dictate how the rest of the year goes. If we still see dismal sales figures in April, May and June, it could trigger sellers to become more anxious causing further price reductions pushing values down as sellers compete with other sellers for the shallow buying pool.

Future interest rate increases will undoubtedly further complicate our challenges. Although we had a reprieve this week when the Bank of Canada kept lending rates in check, they did hint that an increase is likely in the foreseeable future.

So what does this mean “now”?

The next couple of weeks may be key for a buyer making a new purchase to maximize their buying power. That same period of time is also going to be key for a seller to maximize their equity position for the next few weeks, months and possibly years.

The time is NOW!

Looking Forward in the Real Estate Market

I have had the opportunity to chat with a wide variety of home owners over the past few weeks regarding the current real estate market in Calgary and area and thought I would share some of the information I have gathered. I have been reading in the news that many economic experts feel that we have “turned a corner” from the economic downturn we have been experiencing in Alberta since the chaotic fall of oil prices in late 2014. I am still looking for evidence of that in the real estate market…

The first half of this year did seem to see somewhat of a recovery in sales numbers when compared to our dismal market from October 2014 to the end of 2016. Buyers were coming back to the market in droves and for a few weeks supply had a difficult time keeping up with this new demand. I would suggest that a good portion of this wave of new buyers was from the pent up buyer pool created in the past two years. Many potential buyers were on the fence for a long period of time waiting “to see what happens”, those buyers contributed to the great run of sales in the first few months of this year. This large pool of buyers that had been accumulating in that time has quickly diminished as many found their new homes and many new listings were added to the inventory as sellers saw a great influx of sales – and increased values.
In the first three months of this year, inventory levels were between 25 and 32% below the same period of time last year. Moving in the opposite direction, single family sales increased 19% year over year in the first quarter. This increase in sales in combination with the lower inventory helped flame the buying frenzy.

Then a couple of increases in the Bank of Canada rate added to the turmoil, but contributing in the opposite direction… The first increase of a quarter percent in July was partially responsible for the 27% decrease in sales across the board from June to July. Granted we often see a seasonal decrease in sales this time of year – last year there was a 13% drop and in 2015 we saw an 8% decrease – but doubling last years rate and tripling the drop from the year before is concerning. The second increase in lending rates in September has contributed further to lower sales figures and an ever increasing level in inventory, there are now more detached homes for sale than we have seen in the past three years.

Looking at a few communities for a micro view of the market, we see similar trends throughout the city. In Panorama Hills, the largest community in Calgary, there are currently 90 detached homes for sale. This year there have been an average of about 16 sales per month, very close to the same as last year. Last month there were only seven sales, half of the 14 sales from last September. Next door in Evanston there are 88 active listings and they had 12 sales last month. In Hidden Valley there are 23 active listings and there were four sales in September. In my own community of Hanson Ranch, the last sale was back in August, there are currently eight active listings (although I did see a property inspector at the listing up the road from me today!)

Back in June I sold an apartment styled condo in Country Hills Village, a community comprised completely of multi family buildings. I noticed that the most recent sale in the area was a very similar sized home in the same building as my own sale. Back in June, my listing sold for $244,700, this last sale a couple of weeks back was 5% lower at $233k.

Looking south at Cranston, they have faired better than the Northern Hills. Although there are 100 active listings there today, they did see 25 sales in September, very close to the average of 26 sales per month they have maintained this year. A quick look through the seven sales so far this month brought me to the sale of a two storey home on Cranbrook Crescent that sold on Friday for $635k… this home had been on the market since late April when they originally were asking $698,888. The home was purchased only a year earlier for $670k, so looks like the sellers lost quite a bit of equity. Although this is not the “norm” in the area, it does go to show that there are some of these scenarios where ever we look.

Switching over to Killarney just west of the City Centre, there are 21 active listings. The nine sales there since the beginning of September averaged two months on the market and sold, on average, $47,560 below their original listing price.

Complicating the market further is the potential pending change in the qualification process for ALL mortgages, regardless of how much the seller is putting down. On a conventional mortgage with 20% cash down, that could mean up to a 20% decrease in one’s buying power. We are also heading into a typically slower sales season as we head toward winter. I suspect the average days on the market will increase week by week, creating a more anxious seller. If we continue our path of an ever increasing inventory and slowing sales, we could certainly be in for some challenging times in the coming weeks, months and possibly years.

Every neighbourhood has a different set of circumstances, and as you can see above, some areas of the city are doing better than others. There are still buyers, even though the sales pace has certainly slowed, and there are still good investment opportunities. In a volatile market such as our current situation, it is imperative that one is well-informed to the nuances of the market so that you can make well-researched and educated decisions on how to proceed with your real estate asset whether you are considering selling, or buying. 

Western Gold Real Estate is a premium boutique real estate brokerage dedicated to a client-centric approach to listing and buying real estate. We pride ourselves in offering in-depth analysis and strategic insight into selling, marketing and purchasing your real estate investment. A trusted real estate advisor is a huge asset and a prudent member of your team!

For more insight into the current real estate market, please do not hesitate to contact me at your convenience for a complimentary real estate consultation.

Losing Balance, Regaining Control

Information gathered from a presentation by Todd Hirsch, ATB Financial's Chief Economist - September 9th, 2015

There have been serious imbalances in Alberta's economy over the past five years or so, and Albertans are worried... we have been relying on high oil prices and a stable and expanding energy sector to grow our economy and province. The recent extended period of lower oil prices is certainly a major contributor to the current economic environment we are seeing in Alberta, and across the nation. Make no mistake, low energy prices is a National issue, not just a provincial challenge! Last year at this time the cost of a barrel of oil was around $97, today we are looking at the mid $40's. Aside from the obvious effect that has on exploration and new capital expenditures, it also affects the Federal and Provincial Governments coffers.

To regain an economic balance, four things need to happen...

1) There must be some rebound in the price of oil. Reaching and sustaining around $60 a barrel should stabilize the industry, and contribute to our economic recovery. There is much debate regarding the question of whether or not we are in an economic recession in Alberta. We will not know for sure until April of next year whether or not we did see two consecutive months of economic retraction as that is when those figures are released.

2) There must be a re-balancing of wages. In the past decade the average earnings in Canada increased 29%, for that same period Albertans enjoyed an increase of 48%... here is the real kicker though, the average wage in the oil and gas industry increased 56%!  With many capital projects being put on hold in the energy sector, there should be downward pressure on wages as more contractors compete for less work.

3) We must see strong performances in other sectors of the economy. Agriculture, forestry and tourism should benefit from the lower Canadian dollar and lower gas prices. The US economy is also on an upswing, including new housing development contributing to the demand of products from our forest sector.

4) The value of the Canadian dollar needs to remain where it is. The lower value of the Canadian dollar is giving a bit of a cushion to lower oil prices, contributes to tourism from other countries and adds value to other exports such as forestry products.

The energy sector will need to adjust to these lower oil prices, and diversifying into other resources and alternate energy will be prudent going forward. I am sure we will find that we indeed have been in a recession this year, the question is to the extent of this retraction. Albertans are a resilient bunch and will persevere through this economic crunch. This should be a modest recession and we will most likely see a below average growth rate in the coming year. Generally people will be cautious in their investment and spending habits in the next few months, however, this should be a softer downturn than we saw in 2009-2010.

The new norm will be lower growth rates, right across the world. The rebalancing of income will start in the petroleum sector and move into other sectors of the economy leading to softer commodity prices, including real estate. Price corrections are most likely inevitable, however, should not be severe.