Poll: Residential prices to see further drops in the near future

Price declines are likely to persist over a prolonged period, new survey warns

Poll: Residential prices to see further drops in the near future

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.

Read more: Prices, economic prospects discourage single Canadians from ownership

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.”