Riocan living . House prices in Toronto will plunge by 14%. According to the monthly report just released by the Toronto real estate bureau, home sales in the GTA area plummeted in April, down 67% from a year earlier, while the city of Toronto fell 68%.Please Visit: Riocan living to Get Your VVIP Registration Today!
However, house prices remained basically stable, with prices of detached houses and condo falling slightly among all types of houses.
According to a study released by Canadian credit rating agency DBRS (Dominion Bond Rating Service), by the impact and impact of COVID-19 ‘s epidemic, Canadian house prices will fall by about 10% by 2022, and Toronto, the largest city, will fall even more, possibly by 14%!
DBRS said the impact of the epidemic has led to massive unemployment, and more and more people will be unable to pay their mortgages or default on their payments, especially in oil-producing provinces. When the economic crisis comes, house prices across Canada will fall significantly, and the price adjustment may reach about 10%.
Even under mild circumstances, all 10 provinces of Canada will experience a severe recession by 2020. The provinces hardest hit include Alberta, Saskatchewan, Newfoundland and Labrador, which are expected to have a severe drop in GDP due to the additional impact of low oil prices.
For big cities such as Toronto, where house prices have risen sharply in recent years, the decline is expected to be even greater. DBRS reckons that house prices in Canada’s largest city are expected to fall by 14%, even if not the worst, under a “moderate” impact.
Analysts at DBRS pointed out that Canadian home sales fell 14 per cent in March from the previous month, mainly because more than 3 million Canadians, or 5 per cent of the workforce, were unemployed or working fewer hours. But the March employment report is based on a week before most major provinces shut down all non-essential services, so it can be expected that unemployment in April will undoubtedly “deteriorate significantly”.
In setting up its rating base, DBRS also takes into account Canadians’ mortgage arrears and points out that Canadian households’ debt to disposable income has far exceeded international standards, which is currently 176 per cent. It means that Canadian households owe 1.76 yuan for every 1 yuan of disposable income.
The rating agencies also stressed that this was not a forecast, but rather a benchmark in moderate and “unfavourable” scenarios as the basis for debt rating analysis.
DBRS pointed out that after the recession of 2020, economic growth will gradually recover in 2021. But the unemployment rate will still be high, and it is estimated that the national unemployment rate will fall to between 7.5% and 8% by the end of 2021.
Michael Heydt, senior vice president of DBRS Morningstar, said in an email to the Financial Post, “the result may be better than the medium situation, house prices will not fall so much, or worse than the adverse situation, then house prices will fall even more.”
He also mentioned in an email that the agency would update the judgment at the end of May.
So far, no institution has made such pessimistic forecasts for house prices in Canada and Toronto.
The Canadian Mortgage and Housing Corporation (CMHC) recently mentioned that its data show that about 10 per cent of homeowners across Canada choose to postpone mortgage payments, especially in parts of the country that are heavily dependent on the oil and gas industry, a proportion that appears to be even higher.
But CMHC officials did not expect house prices to fall so much. It is only frankly that house prices in the country may not return to pre-epidemic levels until the end of 2022 at the earliest.