According to latest figures from the Canadian Real Estate Association, the housing prices across Canada has dropped by 11 per cent since May 2008.

The Canadian Association of Accredited Mortgage Professionals predicts mortgage approval activity to fall nearly 12 per cent to $193 billion in 2008, compared to $218 billion in 2007. Approvals are forecast to fall another 10 per cent to $174 billion in 2009 and another 1.6 per cent in 2010 to $171 billion. That follows a growth rate of about 11.5 per cent annually for the three years ended August 2008.

The puncturing of housing bubble and start of recession in Canada, there is not going to be much activity in housing market either from buyers are sellers. The housing market may recover by the end of 2009 but home owners may not expect new housing boom in near future, at least not in 2009.

A leading banker, who wanted to remain unidentified, said a possible initiative from the government which could restore confidence and help galvanise the real estate sector is to reconsider the provision of residence visa facility for buyers of free-hold residential units. “In fact, an impression created by some developers during the beginning of the recent property boom cycle that all free-hold buyers would be granted residential status had been driving the market at a phenomenal pace of growth. However, a few months ago when authorities clarified that buyers of free-hold property were not entitled for residential visa status, the market started to get a jolt as several international investors pulled out of the market.”

Dr Ram Buxani, founder-chairman of Overseas Indians Economic Forum, said those who bought multiple of units to take advantage of lucrative earning opportunities should be accorded “an affordable exist route so that they do not resort to distress sales, delaying further the recovery of property market. The projects which have not taken off or just started must be put on hold and impatient and incapable investors should be allowed a convenient exit.” He said the sudden demand slump in the market and credit squeeze by banks have caught such investors unawares. “Faced with a Catch-22 situation, they are likely to default or resort to distress sales that may aggravate the resulting in longer delays for the market to revive. These individuals need to be addressed differently than bulk corporate and rich investors.”

The Prime Minister also raised the possibility that a depression — loosely defined as prolonged recession where output declines more than 10 percent — might be possible. “It could be, but I think we’ve learned enough from the 1930s to avoid some of the mistakes that caused a recession in 1929 to become a depression in the 1930s.”

The opposition parties refused to endorse it, leading Prime Minister Stephen Harper to request Parliament be shut down to January 26, rather than face a confidence vote.