M city 5 condos.The Canadian real estate market will fall back? the continued impact of the 2019 coronavirus outbreak on the economy will cause Canadian house prices to fall in 2021 and then rebound in 2022.Please Visit: m city 5 condos to Get Your VVIP Registration Today!
In a new report on the global property market, the rating agency predicts that Canadian house prices will fall by 3 to 5 per cent in 2021, after rising 7 per cent this year.
“We attribute the expected decline to rising unemployment and falling demand caused by growing affordability problems,” Fitch said. ”
Fitch said the unemployment rate is expected to fall to 7.8 per cent in 2021 from 9.5 per cent in 2020, still well above the average of 6.3 per cent in the previous five years.
“about 15 per cent of the workforce is self-employed and they are hardest hit by the epidemic,” the rating agency said. ”
At the same time, falling rents, fewer immigrants as a result of the epidemic, and lower mortgage affordability will also depress demand, which in turn will depress house prices, Fitch said.
For example, the report points out that rents in big cities have fallen by 10 per cent by 15 per cent, which “makes buying houses less attractive”.
The number of immigrants fell 41 per cent in the first seven months of 2020, and Fitch said it expected the number of immigrants to remain depressed by 2021, which would further reduce housing demand.
In addition to falling house prices, Fitch expects an increase in the number of existing borrowers defaulting on mortgages in 2021 as deferred repayments come to an end.
At present, up to 16% of mortgage borrowers are in the deferral stage, according to the rating agency.
As the policy expires, Fitch expects default rates to rise 0.35 per cent and 0.50 per cent next year.
“while we expect default rates to rise in 2021, we do not expect default rates, low sales or foreclosure rates to rise to levels seen during the 2008 financial crisis,” Fitch said.
“this is because the service organization has a strong relationship with the borrower and closely monitors the borrower’s financial situation after arranging their repayment.”
Although the real estate market faces some headwinds in 2021, the situation is expected to basically return to normal in 2022 as the economy recovers.
Fitch expects prices and default rates to return to pre-COVID-19 levels by 2022.