However, according to a Reuters poll, this is unlikely to make them affordable enough
Toronto. Photo: pixabay.com
Canada’s rising home prices will fall sharply next year, but not enough to make them affordable, as the central bank prepares to continue raising interest rates and keeping them high for longer, a Reuters poll showed.
Fueled by near-zero interest rates, already sky-high prices in one of the world’s hottest housing markets have risen 50% since the start of the pandemic.
An Aug. 12-30 survey of 14 real estate analysts showed Canadian median home prices are expected to rise 10.3 per cent this year, slower than the current pace of about 11 per cent.
While prices have fallen by almost 6 per cent since the Bank of Canada began raising interest rates in March, analysts say it will be years before housing becomes affordable again, if at all.
Average home prices are expected to fall 7.8% next year, well above the 2.2% decline forecast three months ago. If that happens, it would be the biggest decline since at least 2005, when the Canadian Real Estate Association began collecting home price data.
Five respondents expect a double-digit decline to 18.2% next year. Home prices in Toronto and Vancouver are expected to fall 8.5% and 7.3% in 2023, after rising 10.3% and 10.6% this year.
“The pandemic may not be over, but the pandemic property boom certainly is. And the bottom is probably a long way off, as our central bank still has a long way to go,” said Robert Hogue, assistant chief economist at RBC.
Separate data from the Toronto Regional Real Estate Board showed that home prices in the Toronto area rose, albeit slightly, for the first time in six months in August, combined with sales growth on a monthly basis.
The region’s median home price rose to C$1.08 million in August, up 0.4 percent from July and up just under 1 percent year over year. However, they are 19% below their February peak.
On a seasonally adjusted basis, sales increased by 11% and the average price increased by 2.1% on a monthly basis.