The Design District.House prices in Canada are unlikely to rise any more. Moody’s, one of the three credit rating giants, believes that soaring interest rates squeeze demand for homes and that the Canadian housing carnival will eventually come to an end.Please Visit: The Design District to Get Your VVIP Registration Today!
According to BetterDewelling, Moody’s current risk model shows that if the economy remains in its current state, house price growth will stagnate, there is little chance of further rise, and in the worst case, house prices could fall 30 per cent from their peak.
Moody’s believes that if the market is similar to the last round of housing policy tightening, house prices are estimated to fall by only 3%. Brendan Lacerda, a senior economist at Moody’s, said the best summary of the current housing market forecast should be a repeat of the peak price decline cycle from 2016 to 2019.
Lasseda believes that immigration, a strong job market and tight housing supply are the main factors supporting the housing market. As long as families have a stable income, people will carefully adjust their spending on their own and will not be affected by external factors.
The portion of the income used to provide housing will not be returned to the economy for output. A decline in corporate revenue usually leads to a decline in spending, which is bad for the health of the job market. The principle is the same as high inflation diverts capital from productivity. The deterioration of the job market will in turn affect the production and development of enterprises.
The shortage of housing, which is often talked about by the outside world, is also an ambiguity. Manyin has talked about this problem several times, almost to make people understand the problem of excess demand. Under the current situation of soaring house prices, people can hardly resist the temptation, and now they are unwilling to sell their old houses for new ones when they change houses. When house prices fall or fall, the number of houses will naturally increase.
Moody’s analysis believes that according to the current housing market, prices continue to rise little room. Another Moody’s model analysis shows that house prices have only 10% room to rise in the future.
Lasseda said that at present, house prices in the market are unlikely to rise, and all the pressure is towards the lower end of the housing market.
Moody’s analysis believes that Canadian house prices are at great risk of falling, but the upside will not be washed away before. In a worst-case scenario, house prices fall by 22% a year, and if that happens, they are estimated to fall back from their peak to 30%.
Lasseda said that the current downside risks in the housing market are considerable, but only if there are multiple adverse economic factors, the most important of which is that the labor market worsens as a result of the current high inflation. While the central bank raises interest rates to control high inflation and the labor market worsens, the housing market is likely to become a secondary problem.