Desjardins maps out the possibilities for the Canadian housing market
Canadian housing activity is likely to “hit a bottom” by the end of 2023 mainly due to interest rates and tightness in the labour market, according to Desjardins.
The high-rate environment will prove particularly influential, as the impact of prior rate hikes has yet to fully manifest, Desjardins said.
“As such, there is likely more pain ahead for Canadians, including a recession in 2023,” the firm said in its latest forecast.
However, the trend is also likely to shift towards the opposite direction very soon.
“We are expecting national home sales to reach a low in the second half of 2023 before lifting off again,” Desjardins said. “The increase in sales should outpace listings, spurring a return to a seller’s market in some provinces before the end of 2024 and, hence, higher prices. This will act as a brake on improved affordability at the national level next year.”
Housing supply is expected to mirror this trajectory.
“New listings should similarly reach their trough by the end of 2023, but not enough to keep the sales‑to‑new listings ratio from moving higher,” Desjardins said. “Housing starts are likely to lag behind existing home sales and listings by a quarter or two, but they too should rebound in 2024 after a relatively brief downturn.”
Intensified immigration will be the bedrock of the market’s long-term stability by the middle of this decade.
“Along with falling interest rates and solid household savings, this will provide a foundation for the housing market recovery that we anticipate to begin before the end of 2023,” Desjardins said. “As a consequence, sales activity should return to roughly its pre‑pandemic pace by the end of 2024.”