Where will Prices Go? An Update on the Canadian Housing Market

By Nurit Altman with Robert Hogue
Published July 22, 2022 | 11 min listen

The Bank of Canada’s monetary policy supporting decades of low interest rates has been a strong tailwind for the Canadian housing market. Coupled with robust demand for all types of housing - driven by demographic trends and ambitious immigration policies, Canadian house prices reached a peak in February 2022. But a sharp reversal of policy in March and a forward trajectory of interest rate hikes has set the stage for a very different housing market than the ones Canadians have become accustomed to.

On this episode of The Real Pulse, Robert Hogue, Assistant Chief Economist, RBC, joins Nurit Altman to help decipher what rising interest rates, construction costs and recessionary fears will mean for the housing market.

View Audio Transcript


Key takeaways


With the prospect of even higher interest rates over the coming months, the housing market will cool further in the near term into the fall. Expect downward pressure on home prices probably in later stages of this year and possibly early next year.


In terms of price corrections, RBC forecasts a peak to trough correction of 12-13 percent on a national level.


The bar to become a home-owner has risen quite significantly over the past year due to higher prices, and more recently, significant hikes in interest rates. This will bring more people into the rental market. So in that sense, RBC remains bullish in terms of rental demand.


Over the last year there has been a significant change in the conversation from a policy perspective. There is now more of an emphasis on the supply side, which is something that home builders have been talking about for years, but policy makers are now focused on.


If there is a price correction in line with RBC’s forecast, this at the margin could lead to improvement in affordability.

Disclosures and Disclaimers

Housing MarketNurit AltmanReal EstateRobert HogueThe Real Pulse

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