After peaking in February 2022, the average Canadian house price has fallen by about $180,000 due to a series of annual interest rate rises.
According to Moshe Lander, an economics professor at Concordia University in Montreal, this "softening" of the market signifies a transition to more realistic property value. He predicted that the current market environment of falling housing prices would last till 2023.
Most economists and analysts cited unacceptably high mortgage rates, insufficient inventory on the market, and uncertainty about where the Bank of Canada's interest rate cycle would eventually peak. They anticipate the cooling to continue until 2023.
But at what point will the Canadian housing market's price falls stabilize? And will it affect all types of markets and properties similarly?
Where will prices bottom out?
From their high in February to their trough in November, home prices in Canada plummeted 19% to an average of $636,838. Assistant Chief Economist at RBC Robert Hogue said preliminary indicators indicate the downturn is entering its terminal stage. Hogue hypothesized that the economy would recover after the Bank of Canada stabilized its benchmark interest rate.
Will interest rates keep rising?
On January 25, the Bank of Canada will make another statement. Even while the central bank said it could be ready to suspend interest rate rises, further raises have not been ruled out. If required, the bank will "act decisively" with interest rates.
Some housing markets could see price growth.
Re/Max, The property market in Canada is expected to have both price increases and decreases in 2023. According to Re/projections, Max's housing prices throughout Ontario will likely fall significantly by 2023, with the Greater Toronto Area (GTA) seeing the most significant decline. Nonetheless, there will be an expansion in certain parts of the nation in 2023.
Condos and urban centers are expected to hold up well.
The pandemic did not cause a significant increase in the cost of condos and downtown homes. With COVID-19 limitations lifted, people are returning to work, counteracting the outward movement. As mortgage rates are at a record high, buyers of reasonably priced condominiums will be in great demand.
Will major cities like Toronto and Vancouver see prices drop?
Rabin said that sellers would not budge from their asking prices. Many may be unwilling to lower their asking prices without a pressing need to sell. As a corollary, Vancouver's housing values have remained virtually unchanged despite the current high-interest rate environment. In 2023, housing market equilibrium is expected to reach 60% of the nation.
In 2023, the pre-construction sector may feel the sting of rising interest rates. Several purchasers have been left out of the latest price drop since they committed to buying during the outbreak's peak. Due to the impending completion of such properties, the purchasers will be placed in precarious circumstances.
Prices in smaller areas are expected to tumble the greatest in 2023, according to RBC's associate chief economist Robert Hogue. Markets like this may be found in the suburbs of large cities like London and Kitchener in Ontario and the Fraser Valley in British Columbia. During the epidemic, these areas had some of Canada's highest price spikes as people fled the population centers.
Reference:
https://blog.remax.ca/canadian-housing-market-outlook/
