Yonge City Square buzzbuzz.House prices may fall by 15% from their highs. Under the pressure of rising interest rates and slowing economic activity, the Canadian real estate market may see a correction, but it will not collapse, according to a new report from a Canadian economic team.Please Visit: Yonge City Square buzzbuzz to Get Your VVIP Registration Today!
By the end of next year, house prices are likely to fall 15 per cent from their peak in February 2022, but will still be higher than they were before the outbreak.
Looking ahead, we believe that rising borrowing costs will put pressure on activity in the real estate market, as more and more interest rate-sensitive households are preparing for the coming storm.
This is expected to lead to continued weakness in sales activity, resulting in continued downward pressure on prices. ”
Canadian house prices have fallen in the past two months after hitting a record C $816700 in February, according to the Canadian Real Estate Association. The February figures are not seasonally adjusted.
At the same time, the Bank of Canada has begun to raise benchmark interest rates aggressively, raising them by 50 basis points in each of the past two meetings to combat inflation, which is at a 30-year high. Historically, the last time the Bank of Canada raised interest rates on a very large scale was 22 years ago.
The report said that the decline in different markets is not expected to be the same, and that the greater pain will come from those markets where prices have soared due to the influx of Canadians who can work remotely during the blockade of the epidemic. And prices soared.
When we look at how the correction in the national housing market will have an impact in different provinces, to some extent, we expect the correction to be contrary to the rise in house prices during the epidemic. ”
“for example, the provinces with the biggest price increases, particularly the Ocean Province, should have the largest correction. By contrast, the provinces with the least price increases, such as Prairie and Newfoundland and Labrador, should have the least correction after the end of the epidemic. ”
As people gradually return to work in the office, some housing markets in Ontario may feel some pain because they are a little too far from large urban centres, although immigration and mixed work models can alleviate the situation.
“as borrowing costs rise and commutes increase, communities a few hours’ drive from Toronto may see the fastest cooling in sales activity and house prices,” they said. ”
“but again, we do not expect average house prices in these areas to be lower than they were before the outbreak, mainly due to high levels of international migration and ongoing mixed work patterns.”
Overall, the correction should bring the domestic real estate market back to a more balanced state after the recent rally.
The expected correction in the Canadian real estate market appears to have begun, although it is still concentrated in a few markets. But there is no need to panic. ”
Although house prices in most provinces are likely to see a 10% to 20% correction by the end of next year, average house prices are expected to be higher than the levels and trends seen before the outbreak.