The average price of a home in Canada peaked at $ 790,000 in February 2022, up 50 percent over two years. But the report, published Wednesday by Desjardins, says that by December 2023, the average national housing price could fall to about $ 675,000. Housing prices have been falling steadily since the Bank of Canada began raising interest rates to fight inflation. Desjardins says the average home price in Canada fell 2.6 percent month-on-month in March and 3.8 percent in April. However, despite the expected decline, Desjardins notes that $ 675,000 is still almost 30 percent higher than it was in December 2019, when the average price of a home was $ 530,000 in Canada. Jimmy Jean, chief economist and general at Desjardins, says he expects falling house prices to be “manageable enough” before stabilizing, citing rising levels of immigration and the continuing shortage of housing amid strong demand. “Our expectation is that the housing market will slow to moderate, but we do not expect any collapse by any measure,” Jean told CTV News on Thursday. For most homeowners who plan to continue living in their homes for decades to come, including those who jumped on the market near the top, Jean says this housing fix will be just a small “gap”. “Housing is an investment you usually make in the long run,” Jean said. “Eventually, you buy a product to raise a family, to live. So, in the long run, things will stabilize and come back. So, it’s not a big concern in that regard.” But it’s a different story for real estate investors who were expecting huge profits from rising house prices. “If you rent a property, sometimes, if you do not receive enough rent to cover the cost of mortgages or utility costs, these decisions were still justified by the idea that prices would continue to rise,” he said. . “Now is another story.” The Bank of Canada is expected to raise interest rates again by another 50 basis points in July, and Bank Governor Tiff Macklem said interest rates may have to jump to 3.0%. But Desjardins economists believe Macklem will not need to reach 3.0 percent and say 2.25 percent will be enough to slow inflation. “The Canadian economy is very sensitive to rates,” Jean said. “We believe that this moderation will be significant and will slow down economic growth, and therefore inflation, and this will remove the need for Tiff Macklem and the Bank of Canada to increase by up to 3%.
HOUSING CORRECTION WILL BE MORE SERIOUS IN THE NAVY
While Desjardins predicts a 15 percent drop nationwide, some areas may face even greater corrections, especially in parts of Canada that have seen the sharpest increases in pandemic home prices. After years of declining population, offshore counties have seen a surge in population growth since 2020, as the advent of long-distance labor has allowed more Canadians from major cities to flock to the east coast in search of larger and more economical spaces. living. In turn, PEI, Nova Scotia and New Brunswick recorded the highest increases in house prices in the country. Compared to December 2019 levels, the average house price in these provinces increased by 62 to 70 percent in February 2022. These provinces are also expected to see the biggest corrections. Dejardins says housing prices could fall by between 18 and 20 percent. Meadows and Newfoundland and Labrador saw the smallest increases in house prices during the pandemic. These provinces rely heavily on oil and crude prices fell in the first months of the pandemic. Housing prices in these areas are expected to fall by between two and 10 percent by December 2023, according to the Desjardins report. BC house prices are also expected to fall by 15%, narrowly reflecting the national average, while prices in Quebec will fall by 12 per cent thanks to “much more affordable housing and a less overpriced market”, the report said. Ontario housing prices are expected to fall by 18%, but these reductions will vary greatly between regions. Like Maritimes, communities within a few hours drive from Toronto saw house prices rise by 70% between December 2019 and February 2022, as many Canadians started working from home. Desjardins says outside of the greater Toronto area, house prices could fall by 20%, with the largest reductions expected in Bancroft, Chatham Kent and Windsor-Essex. With files from CTV National News Parliament Hill correspondent Kevin Gallagher.
