Prices are set to tumble in 2021 with most major markets affected according to new outlook
Canadian home prices have been holding up well, even increasing, despite the pandemic. But things are set to change.
A new report from Moody’s Analytics calls for a drop of near 7% as the economic recovery slows in the first half of 2021 amid the end of government stimulus and high unemployment.
The report notes that the housing market has been aided in 2020, despite the challenges of sales during lockdown, thanks to low interest rates and rising population combined with mortgage deferrals and other measures.
Pent up demand has seen sales spike post-lockdown and prices have been buoyant, even during the weaker months for sales.
But economist Abhilasha Singh says that these supportive conditions will not maintain prices indefinitely.
“The housing market will no longer be able to escape the poor condition of the labor market as vacancy and delinquency rates rise in 2021,” she said. “However, while all regions are expected to experience price declines, the size of the impact will vary meaningfully across regions.”
Where the pain will be
Homeowners in Calgary and Edmonton are expected to see the largest decline in the value of their investment. The two cities’ exposure to challenges in the oil industry will spark a 10% decline in house prices.
Regina will see a drop of more than 9% and Toronto will not be far behind. Vancouver is facing a 7% price decline the report says.
Urban markets dominated by condos will suffer from COVID-19’s negative impact on immigration.
The report is in collaboration with RPS Real Property Solutions Inc.
