The Canadian Housing Market Outlook
By Nurit Altman and Craig Wright
Published October 28, 2021 | 12 min listen
Canada’s housing market demonstrated surprising resilience in the face of the pandemic with record levels of activity and prices. While the buying frenzy has calmed from extreme levels, the market continues to operate at historically high levels. How the dynamic of increasing demand, constrained supply and government intervention will play out is being closely watched by those in the real estate industry.
On this episode of The Real Pulse, Craig Wright, RBC’s Chief Economist sits down with Nurit Altman to discuss the Canadian housing market and how the supply-demand dynamics facing the sector will play out in the coming months.
During the pandemic, the household savings rate increased to historic levels – there is now C$280 billion sitting in bank accounts. With this increased purchasing power, we expect continued strength in housing demand for the foreseeable future.
The federal government’s immigration targets will result in over a million new immigrants over the next three years, putting additional pressure on demand for housing
Housing affordability will continue to be a challenge in the near term as prices continue to increase, interest rates rise and much of the strong income gains will decline - as sizeable government programs will be rolled back.
Despite the disappointing GDP figures, we think the Bank of Canada will hold course and overnight rates will be 50 basis points higher by the end of 2022 relative to today. There is a small risk of a larger move in interest rates – if it were to happen, it will significantly hit affordability and the housing market.
RBC’s base case scenario is for the housing market to cool, not collapse. We expect prices to flatten in the second half of 2022.
For more information from RBC Thought Leadership on the Canadian Housing Market, please see below:
Nurit Altman
Director, RBC Capital Markets Real Estate Group
Nurit Altman is a Director with RBC Capital Markets Real Estate Group, and has over 16 years of experience selling commercial real estate across Canada. Nurit specializes in the sale of multi-family, retail, office and mixed-use properties across Canada. Over the course of her career, Nurit has sold over $13 billion of retail real estate. She is based in Toronto, ON and is a licensed real estate Broker with the Real Estate Counsel of Ontario.
Craig Wright
Senior Vice President & Chief Economist
As chief economist, Craig leads a team of economists providing economic, fixed income and foreign exchange research to RBC clients. Craig is a regular contributor to a number of RBC publications and is a key player in delivering economic analysis to clients and the media through the Economics Department’s regular economic briefings.
A graduate of Wilfrid Laurier University and the University of Toronto, Craig was appointed Chief Economist in 2001 having joined RBC 1994 after working at another financial institution for seven years. Craig is a participant in a number of the key RBC internal committees and is a member of the CD Howe Monetary Policy Council, Lazaridis School of Business and Economics Wilfrid Laurier University, Dean’s Advisory Council at Wilfrid Laurier University and the British Columbia Economic Forecast Council.
Craig and his wife Susan live in Toronto with their three children Emily, Bradley and Jacob.
CanadaEconomyHousing MarketOutlookReal Estate
