Downsview park towns . RBC announces house price trends in Canada. In the face of the ever-changing Canadian housing market, the country’s largest bank, the Royal Bank of Canada (RBC), recently announced that it is ready for a collapse in house prices.
The latest risk assessment report points out that Canadian house price growth will be basically flat in 2021. In the best case, the national house price growth will reach the pre-epidemic level; in the worst case, house prices will plummet, or even fall below the record of the biggest decline since the beginning of 1980, plummeting by 30%!
In this report, the basic situation of the Canadian real estate market is not as optimistic as most institutions predict today. In fact, RBC predicts that house prices across the country will rise slightly by 0.6% over the next 12 months, starting in October. In the next two to five years, the compound annual growth rate will be 4.5%, and the market will remain basically stable.
In the best-case scenario, Canadian house price growth may be slightly lower than currently expected, but the gap is not far. In the next 12 months, house prices across the country will rise by 6.1%, with a compound annual growth rate of 11.1%. At first glance, this figure may seem large, but judging from the performance of previous years, it is achievable. In a worst-case scenario, Canadian real estate prices could fall by nearly 30%! RBC forecasts that house prices across the country will fall by 29.6 per cent over the next 12 months, with a compound annual growth rate of just 2.9 per cent over the next two to five years. There has not been such a significant decline across Canada since the early 1980s.
This international financial report (IFRS 9) uses macroeconomic forecasting methods to assess risks in the Canadian economy and real estate market in terms of basic, best-case and worst-case scenarios. To put it simply, it is to analyze and evaluate all the possible situations. Analysts say the forecast may be an assessment of all aspects of the situation, and people need to take a correct view of the results and prepare for anything that may happen.
In early December, RBC’s chief risk assessment officer said banks were doing their best to increase their tolerance for downside risks. Overall, they don’t think Canada’s overall economy and real estate market are going to be extremely bad, and house prices are expected to fall by about 7% and remain depressed until late 2023. At the same time, RBC also released another report that more and more Canadians have expired their applications for deferred payments, and although the vast majority of Canadians can pay their loans normally, delinquency rates are rising. Statistics show that 1.8% of overdue deferred payments have been defaulted on all mortgages. In terms of breakdown, secured mortgages owe faster than unsecured mortgages. Of the 14.3 billion mortgaged debt, 2.3 per cent of the debt is in default.