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
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
Nurit Altman
Managing Director, RBC Capital Markets Real Estate Group
Nurit Altman is a Managing 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.
Robert Hogue
Assistant Chief Economist, RBC
Robert Hogue is a member of the Macroeconomic and Regional Analysis Group, with RBC Economics. He is responsible for providing analysis and forecasts for the Canadian housing market and for the provincial economies. His publications include Housing Trends and Affordability, Provincial Outlook and provincial budget commentaries.
Housing MarketNurit AltmanReal EstateRobert HogueThe Real Pulse
