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Home values in Toronto and other high-priced Canadian cities have fallen sharply this year as the central bank quickly raised interest rates to combat inflation.
But with the economy now beginning to show signs of stagnation, the Bank of Canada has indicated that its rate hike is coming to an end.
This may prompt more potential sellers to delay listing, hoping to wait until the market picks up.
Although the slowdown in listing and sales also follows the seasonal trend of Canadian winter. Given the pace of rising interest rates, buyers may also have scruples.
Benchmark prices in Toronto have fallen 18.4 per cent on an unseasonally adjusted basis since peaking at about C $1.34 million earlier this year.
Buyers in high-priced markets such as Ontario and British Columbia are particularly sensitive to interest rates, and more of them are likely to wait and see.
RBC forecasts that home sales in British Columbia and Ontario will fall by 45 per cent in 2022 and 38 per cent in 2023.
The decline will be comparable to what happened in Ontario in the early 1990s, when resale volumes fell by 41 per cent and prices fell by 15 per cent.
But it is much lower than in British Columbia in the early 1980s, when resale volume fell by 62% and prices fell by 27%.
Statistics released by the Canadian Real Estate Association on Sept. 15 show that home sales recorded by the Canadian Real Estate Association have fallen for six consecutive months since the Bank of Canada began raising interest rates in March. Home sales fell 24.7% in August 2022 compared with the same period last year. The average selling price of a Canadian house in August was about C $638000 (3.37 million yuan), down 22% since February. Canadian real estate brokerage expert Nasma Ali (Nasma Ali) believes that people are now more cautious about entering the real estate market, not only because of interest rates, but also because of inflation, economic problems and so on.
As the Bank of Canada’s interest rate resolution and related statements were basically in line with expectations, the market reaction was muted, the Canadian dollar barely changed, and Canadian government bond yields rose slightly.