Despite the drop in prices, the demand for real estate in Canada has declined
The central bank has raised the key interest rate by three percentage points since March, to 3.25%, and is expected to impose further increases, which could lead to higher mortgage costs.
Rehab
Canada's National Housing Agency predicts a significant drop in house prices, with the economy entering a "modest recession" by the end of the year, and the national average home price is expected to fall by about 15% by the second quarter from its peak level of C$770,812, earlier. from this year.
According to a report by Mortgage and Housing Canada Corporation (CMHC)
The higher-than-expected rise in interest rates, amid a significant deterioration in economic and consequent income conditions, will cause the demand for homes to continue to decline in the coming quarters.”
And with the real estate market down, Housing affordability will not improve, because higher borrowing costs offset the gains from lower prices.
Economists at CMHC expect rental prices to continue to rise, as those who want to buy a home are forced to rent it rather than buy it.
The new forecast differs significantly from CMHC's forecast in July, where the company had forecast home prices to decline by just 5% by mid-2023.
Romy Powers, CEO of CMHC, indicated in September that this forecast will be updated according to a 10% to 15% drop, because "inflation has been steadier than we originally expected, and the Bank of Canada is taking tighter measures."
The central bank has raised the key interest rate by three percentage points since March, to 3.25%, and is expected to impose further increases, which could lead to higher mortgage costs.
