m city condos mississauga.House prices may fall by 12%. The Canadian real estate market may be undergoing its biggest adjustment in recent years.Please Visit: m city condos mississauga to Get Your VVIP Registration Today!
Benchmark house prices are likely to fall more than 12% from their market peak by early next year, more than in any of the four national recessions in the past 40 years, Royal Bank of Canada economist Robert Hogue said in a report on Friday.
Royal Bank of Canada said it expected sales to fall 23 per cent this year and 15 per cent next year, with a 42 per cent decline since the beginning of 2021 exceeding the 38 per cent decline between 2008 and 2009.
The Canadian property market has shifted sharply since the Bank of Canada began raising its benchmark interest rate from a record low in March. Last week, the Bank of Canada violently raised interest rates by 100 basis points to 2.5% in an effort to curb inflation. According to Hogue, interest rate hikes should not stop until they reach 3.25% in October.
“this will lead to more buyers leaving the sidelines. We expect the economic downturn to intensify in the coming months as resale activity and house prices fall below our previous expectations. ”
Rising mortgage rates may put more pressure on people. Hogue predicts that a measure of housing affordability, the cost of ownership as a percentage of household income, will reach its worst level ever, forcing many buyers out of the market.
British Columbia and Ontario, Canada’s most expensive provinces, will face more severe declines, with benchmark house prices falling 14 per cent and sales falling 45 per cent and 38 per cent, respectively, according to Hogue.
Still, given the pace of overheating of house prices over the past two years, Hogue described the forecast as a “correction, not a collapse”. A decline from such record levels could begin to ease some affordability problems, he said, adding that the surge in immigration and the low likelihood of overbuilding could ensure that the market did not enter a “death spiral”. The adjustment is expected to end sometime in the first half of next year.
We believe that after a two-year buying spree, the ongoing downturn should be seen as a welcome cooling-off period. The two-year buying spree has brought a huge financial burden to many new homeowners and made their dream of buying a house more difficult to realize. “