Price declines are likely to persist over a prolonged period, new survey warns
Canadian home prices are likely to see further declines over the next few months amid the chilling effect of elevated interest rates, according to a new poll.
In Finder’s recent survey of Canadian economists, all respondents said that price declines will persist for the rest of 2022 and well into Q1 2023.
One third (33%) of those polled are expecting prices to fall between 7.5% and 9.99% by the end of the year, while around 25% said that the decline would be in the more modest 2.5%-4.99% range. Only 8% of respondents are anticipating a significant price drop of 15%-19.99%.
“Higher interest rates have clearly impacted the demand side of the market and (this) is starting to show on the supply-side,” said Moshe Lander, economics professor at Concordia University and a panel member at Finder.
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The weaker housing market will aggravate a likely decline in Canadian net wealth, which RBC Economics is expecting to be the largest such drop in decades.
“Though a roaring housing market and surging stock markets created $3.9 trillion in new net wealth during the pandemic, those gains are now reversing,” RBC said in a recent analysis.
“We expect total net worth to fall by more than $1.1 trillion from peak pandemic levels by the end of this year. This decline in household wealth will come at a time when Canadians are already feeling the squeeze of higher inflation and rising interest rates.”
