I just returned from a trip to England visiting family and friends. I was obviously interested in the state of the economy and especially the housing market over there. I must say what I saw was not a pretty sight. The house prices in UK have been dropping for the past 15 months. In 2008 the prices dropped by about 14%. We hear about the US housing prices every day in the news which is worse than what is happening in UK or, for that matter, in all of Europe. So what is going on in the real estate market here in Canada?

Fortunately, mostly due to our strict regulation on the banks we have not suffered as badly as US or Europe. We are, however, feeling the side effects of what is happening in our neighbouring market. Our house prices in Durham dropped in October of 2008 for the first time and only by 3%.  In November and December the prices declined as well so we are in a downward trend. All the forecasts from the economists indicate that this trend will not last too long and the predictions are a 5 to 10% drop in prices by the end of 2009.

-- Masood Vatandoust