Cielo condos . Economists overturn CMHC house price forecast! Canadian mortgage and housing companies have been bearish on the Canadian housing market since the start of the epidemic. They said six months ago that Canadian house prices may fall by 9-18%, scaring many friends who invest in real estate.
However, the time has come that instead of plummeting, Canada’s housing market has seen a record increase in sales and prices, with sales up 45.6% from September last year, and average prices breaking the 600000 mark, up 17.5% from the same period last year.
According to the latest survey of 15 economists, CMHC’s previous forecast of a 9-18 per cent fall in house prices this year no longer applies to the current situation in Canada.
In the survey, seven economists predicted that Canadian house prices would rise by an average of 3 per cent over the next six months.
Most of the economists involved in the survey said that the current ultra-low interest rates are likely to last until at least 2023.
Many experts have long been unhappy with CMHC’s previous forecast, and Christopher Alexander, executive vice president and regional director of the RE/MAX Integra Ontario-Atlantic region, criticized it in early October, calling it a false “act of intimidation”.
“although I can understand some of the reasons for CMHC’s prediction, especially in the spring, when a lot of things are still unknown,” Alexander said.
“but the market data have not experienced such a sharp fall in prices, especially in Toronto and Vancouver, the two largest real estate markets, which continue to rise.”
Alexander also said that the prairie did face different situations and challenges because of the energy industry, but the rise in Ontario and BC was expected to offset the slowdown in housing activity in Saskatchewan and Alberta.
Sherry Cooper, chief economist at loan broker Dominion Lending Centres, also said the forecast was “too pessimistic” given that average Canadian house prices rose 1.5% in august.
Such remarks have been echoed by many economists, who believe that Canadian house prices are actually rising in general, while historically low lending rates have pushed the market more active, leading to further price increases.
That said, because the epidemic is still raging, about 33% of economists in the survey believe that housing activity in Canada will decline slightly at least until mid-2021.
Tony Stillo, director of Canadian economics at the Oxford School of Economics, believes that there are many reasons why people are not optimistic about the housing market. These include historic income losses, job instability, fears and uncertainties about viruses, stricter CMHC lending rules, suspensions of immigrants, outflows from high-density urban markets, sluggish demand for Airbnbs from tourists and foreign students, and the end of bank mortgage delays.