The market slowed down in 2022, and the Canadian Real Estate Association predicts that house sales will decline by less than one percent and home prices will decrease by over six percent from that year on.
The organization predicts 495,858 will change hands in 2023 based on sales that have "more or less" stabilized since the summer, "suggesting the downward adjustment to sales activity from increasing interest rates and increased uncertainty may be in the rear-view mirror."
Similar factors will also have a negative impact on the median house price, which CREA predicts will rise to $662,103 by 2023.
According to Desjardins's forecast, Canada's housing market will return to equilibrium in 2023 due to sharp price drops. Desjardins predicts that the national average house price will drop by more than 25 percent by the end of 2023, compared to the all-time high that was established in February of this year. (Santarelli, 2023)
In its residential real estate publication, Desjardins has just declared that it expects the Canadian housing market to undergo a substantial correction. This was a revision from an earlier prediction that average house prices would fall by 15%. Desjardins explains the gloomier forecast by less upbeat real estate data and tighter monetary policy.
Home industry experts at TD Economics predict that the Canadian housing market won't recover until 2024. Their current expectation is that the average Canadian house price will lose almost half its value due to the epidemic. At the same time, this prediction is very vulnerable to changes in the supply situation. Some homeowners may be compelled to put their homes up for sale as increasing interest rates increase their monthly payments (although the level of new supply hitting the market each month remains subdued).
House values may fall more than expected if many of these homeowners wind up putting their properties on the market. Since February, sales have dropped by almost 40 percent; they are trending at levels not seen regularly since 2012, and they have fallen short of levels compatible with fundamentals like income and home availability.
October's growth was the highest performance since March, bringing the three-month moving average of sales growth to -1.7%. Still, they expect the Bank of Canada to implement further rate rises, keeping a lid on demand and prices. They are expected to keep falling until early 2023.
In October 2022, existing house sales in Canada climbed by 1.3% m/m, although they were still 17% below their levels prior to the epidemic. Eight out of the ten provinces had sales gains, with Prince Edward Island (+26.3% m/m), British Columbia (+5.8%), Manitoba (2.4%), and Alberta (+2.2%) seeing the greatest growth. Quebec and Newfoundland, and Labrador saw decreases in sales of 2.4% and 1.5%, respectively.
Canadian Housing Market Outlook 2023 By Norada Real Estate Investments
Families in Canada face difficulties due to the downturn in the property market. Over the following 18 months, both home sales and prices will continue to plummet. This change is contributing to restoring sanity to the Canadian real estate market, and it should not be interpreted as Canadians aren't still facing tough times.
Economies and marketplaces are becoming more stable and accessible due to recent price reductions. The Canadian housing market aids the central bank's fight against inflation. The slowdown will reduce inflationary pressures enough for the Bank to reverse some rate hikes early in the new year. When Canada's housing market finally finds stability next year, this will positively affect affordability. The conditions for long-term improvement should be established by such developments.
Source:
Campbell, Shantaé. “Canada’s Home Prices to Fall Almost 6% This Year, CREA Forecasts.”
Financialpost, 16 Jan. 2023, financialpost.com/real-estate/home-price-forecast- crea-2023#:~:text=The%20average%20price%20of%20homes,the%20Canadian
%20Real%20Estate%20Association.
Santarelli, Marco. “Canada Housing Market Forecast: Will Prices Drop in 2023?” Norada Real
Estate Investments, 3 Feb. 2023, www.noradarealestate.com/blog/canada-housing-
market.
The Canadian Press. “Home Prices in Canada Could Fall 5.9% in 2023, CREA Forecasts.”
Global News, 16 Jan. 2023, globalnews.ca/news/9413126/canada-housing-forecast-
crea.
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