Canadian Housing Market Trends September 2022


The housing market in Canada had a small price increase for August–September 2022. Canada’s average house price in September 2022 was $640,480, up 0.4% from the previous month and down 22% from its record of $816,720 in February 2022. This slight monthly increase in the average price is most likely attributable to changes in the content of properties sold, given the benchmark price has continued to decline over the last two months. National sales for September 2022 are down 31% year-over-year, with 34,989 purchases.

It remains to be seen if Canada’s housing market prices are stabilizing after reaching an all-time high in February 2022, as Canada’s average house price declined 6.7% year-over-year. Rapidly increasing Canadian mortgage rates, driven on by Bank of Canada rate rises, are one of the issues that have frightened homebuyers in Canada. Even though Canada’s inflation rate has slowed down in recent months, the high levels of inflation in the country still put pressure on policymakers to raise interest rates.


In the last seven months, the average house price in Canada has decreased by 22%, or close to $176k. The MLS Benchmark Price, however, continues to see a yearly price rise. For September 2022, the benchmark house price in Canada is $746,000, up 3.3% year-over-year but down 1.9% month-over-month. If this pattern continues, the benchmark house price will see negative yearly growth in the next few months.

Despite the 6.7% annual decline in the average Canadian house price, the performance of property markets throughout the nation has been diverse. Some communities continued to see monthly drops in property prices and sales, while others saw monthly rises. As Canada’s inflation rate hovers above 7%, mortgage rates have climbed precipitously. While inflation has cooled in recent months, in part owing to aggressive rate rises by the Bank of Canada, property prices in the Canadian housing market have also declined.


As mortgage rates continue to rise, interest rate rises by the Bank of Canada and increasing bond yields will drive up borrowing costs. In September 2022, the Bank of Canada raised rates by 0.75 percentage point, causing prime rates to soar to 5.45 percent, the highest level since early 2008.In the coming months, the effects of sustained rate rises will become apparent. In the meantime, the USD/CAD exchange rate approaches levels not seen in over a year as the Federal Reserve accelerates its aggressive rate rise agenda.

The Canadian Mortgage and Housing Corporation (CMHC) reversed its lending guidelines in July 2021, reversing prior modifications that tightened limitations for mortgage insurance, including credit score requirements and debt service limits. This reversal increased the availability of CMHC insurance, making it simpler for borrowers to qualify for a CMHC-insured mortgage. In addition, as of June 1, 2021, a hike in the mortgage stress test benchmark rate has made it more difficult to qualify for a mortgage. Mortgage affordability for potential homeowners begins to deteriorate as fixed-mortgage rates rise above 4.00%, pushing the mortgage stress test well above 5.25 percent.

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