forma condos.The prospect of Canadian housing market. Ontario and BC provinces saw the biggest declines in house prices, where the housing market also shrank rapidly during the outbreak.Please Visit: forma condos to Get Your VVIP Registration Today!
House prices in Alberta have also fallen rapidly, although overall sales have not fluctuated much. So compared with BC and Ontario, the situation is slightly better. In addition destocking capacity in Quebec also decreased significantly during the outbreak. The slowdown in price growth will also continue for a long time.
Of course, there are also provinces that perform well. House prices are basically stable in Prairie provinces and the Atlantic region. The former has benefited from policy adjustments, while the latter has been strongly supported by population growth.
These different developments reflect the dispersion of buyers during the outbreak. Online office work and the desire for more living space have prompted buyers to avoid the centres of big cities and go to the suburbs and even the outer suburbs. This shift has had a strong impact on price growth in the housing markets in BC and Ontario, where deflation is now faster than in other regions.
It is not normal for this to happen at the same time in several major provinces. In BC province, for example, this pattern of over-adjustment in markets other than Dawen has existed in previous real estate downturns. However, this is not usually the case in Ontario, where other less populated areas are not much different from the Greater Toronto area.
It can also be seen that since February this year, the price of independent housing has fallen by 7% (more than the average price fluctuation), while apartment prices have remained good. This reflects a sharp decline in the purchasing power of independent units during the outbreak. It is also similar to the market in 2017-2019, where a series of macro policies (Ontario’s Fair Housing Program, BMU20) and rising interest rates cooled the detached housing market as purchasing power declined, while apartment prices rose.
Unlike in 2017-2019, we believe that apartment prices will also fall in the coming months, but the magnitude (or duration) may be different from that of detached houses. Because the prices of apartments have also been falling in three of the past four months. In addition, higher borrowing costs and lower prices may affect investors’ psychological expectations, as these costs just offset high rental gains.
From the first quarter of 2022 to the first quarter of 2023, average house prices in Canada are likely to fall by 20-25% from peak to trough, as sales are expected to fall by about 35% over the same period. Reflecting that their trading volumes will continue to decline, more declines are expected in BC and Ontario, while Alberta, Quebec and the Atlantic are likely to contract relatively less. At the same time, we expect prices in Manitoba and Saskatchewan to remain good during this period.
We predict that the decline in house prices across the country will only partially pull back, reaching the 46% increase after the epidemic. As a result, our forecast can be more appropriately described as a “market realignment” rather than a more serious crash.
Please note that our projected trough in Canadian home sales fell just within the range of past real estate downturns and sales fell by 38% as a result of the global financial crisis. The decline we expect is unprecedented (at least since the late 1980s). However, there has also been an unprecedented growth during the outbreak.
As mentioned earlier, demand for larger, more expensive housing soared during the outbreak, putting more upward pressure on average house prices. Because according to the calculation, the average house price will be disproportionately affected by high-end (or low-end) transactions. Especially at this stage, because the valuations of high-end units, such as freestanding houses, are falling at a relatively rapid rate.
First, after the fastest rate hike cycle in decades, we expect the Bank of Canada to suspend rate hikes in the fourth quarter, or at least in very small increments thereafter. This will reduce the impact of policy interest rates. Second, as the economy weakens and inflation slows, we expect five-year bond yields, which support five-year fixed mortgage rates, to fall next year. Finally, Canada’s mortgage eligibility stress test makes it clear that buyers are eligible. This adds a layer of protection to borrowers and lenders from rising interest rates, which are lacking in many countries that have also experienced interest rate shocks, such as the US.
