The ongoing pandemic is expected to have a significant impact on Canada’s housing market. According to a new report from Moody’s Analytics and RPS Real Property Solutions Inc., the average single-family detached house prices will fall by 6.7% next year, while all types of housing combined will see a decline of over 7%. This forecast is based on several factors, including the stalling recovery, economic stimulus fade, and increasing debt problems.
Calgary and Edmonton to Lead the Losers
Among the major cities in Canada, Calgary and Edmonton are expected to lead the losers with a 10% peak-to-trough slide in prices next year. Regina is forecast to follow closely behind with a drop of over 9%. Toronto is predicted to see a near 9% fall in house prices, while Vancouver is expected to experience a decline of just less than 7%.
Pandemic’s Impact on Labour Market and Housing Demand
The report attributes the decline in housing demand to several factors. "The housing market will no longer be able to escape the poor condition of the labour market as vacancy and delinquency rates rise in 2021," says Abhilasha Singh, a report author from Moody’s Analytics.
"High unemployment and lower income will restrain buyers’ return to the market," she adds. "So will affordability issues in Vancouver and Toronto. Further, slower in-migration flows to Canada due to COVID-19 disruptions will weigh on housing demand."
Not Even Lower Interest Rates Will Be Enough
Singh also notes that even lower interest rates may not be enough to save the housing market. "Not even lower interest rates will be enough to save the housing market," she says.
Housing Starts to Decline in 2021
The report forecasts a decline in housing starts from 206,000 annualized units in the first quarter of 2020 to 151,000 in the third quarter of 2021. However, it predicts that the market will rebound in 2022 after vaccines have become widespread.
Toronto and Vancouver Condo Markets to Contract
The report also highlights that Toronto and Vancouver house prices are among the nation’s highest, but their condo markets will contract due to oversupply. "Rental vacancy rates will rise in Toronto and Vancouver as an increased supply of rental units coincides with a fall in demand due to disruption of migration to Canada," Singh says.
Bright Spot: Demand for Suburban and Countryside Properties
One bright spot in the report is the trend of city dwellers seeking suburban and countryside properties with more space. "The pandemic has boosted demand for properties offering more space for working from home and fewer shared areas with neighbours," Singh notes. Smaller markets where such properties are more affordable will particularly benefit from this trend.
Ottawa Appears to Be an Outlier
Interestingly, Ottawa appears to be an outlier in the report’s forecast, with a predicted decline of 3%. This is less than half the amount for the next cities in the outlook, Hamilton, Halifax, and Montreal.
Conclusion
In conclusion, the new report from Moody’s Analytics and RPS Real Property Solutions Inc. predicts that Canada’s housing market will experience significant declines in house prices across major cities due to the ongoing pandemic. However, there are also signs of a bright spot in the demand for suburban and countryside properties with more space.
Related Articles
Join the Conversation
Do you think the pandemic will have a significant impact on Canada’s housing market? Share your thoughts in the comments section below.
History is Foreshadowing the Worst of Times for Markets
The COVID-19 pandemic has had a profound impact on global markets, with many experts predicting that this will be one of the worst economic periods in history. The recent report from Moody’s Analytics and RPS Real Property Solutions Inc. adds to these concerns, highlighting the significant decline in house prices across major cities in Canada.
A Cut in January, Then a Pause: What Jobs Data Mean for Bank of Canada and Interest Rates
The latest jobs data has sparked renewed interest in the Canadian economy, with many experts predicting that this will have a significant impact on interest rates. The report from Moody’s Analytics and RPS Real Property Solutions Inc. highlights the importance of considering the broader economic context when making predictions about interest rates.
How Far Could Trump Go Using ‘Economic Force’ to Try and Annex Canada?
The recent tensions between the United States and China have raised concerns about the potential for economic coercion as a tool of foreign policy. The report from Moody’s Analytics and RPS Real Property Solutions Inc. highlights the importance of considering the broader geopolitical context when making predictions about the Canadian economy.
Howard Levitt: Trudeau’s Exit a Reminder of the Perils of Wrongful Resignation
The recent departure of Justin Trudeau as Prime Minister of Canada has sparked renewed interest in the perils of wrongful resignation. The report from Moody’s Analytics and RPS Real Property Solutions Inc. highlights the importance of considering the broader political context when making predictions about the Canadian economy.
Bundled Pricing: How the Best Mortgage Rates Increasingly Come with Strings Attached
The recent trends in mortgage rates have sparked renewed interest in the world of finance, with many experts predicting that this will be one of the most challenging periods for consumers. The report from Moody’s Analytics and RPS Real Property Solutions Inc. highlights the importance of considering the broader financial context when making predictions about mortgage rates.
Comments
- "The pandemic has had a profound impact on global markets, and it’s essential to consider the broader economic context when making predictions."
- "The report from Moody’s Analytics and RPS Real Property Solutions Inc. highlights the importance of considering the geopolitical context when making predictions about the Canadian economy."
- "The recent trends in mortgage rates have sparked renewed interest in the world of finance, and it’s essential to consider the broader financial context when making predictions."
Related Articles
Join the Conversation
Do you think the pandemic will have a significant impact on Canada’s housing market? Share your thoughts in the comments section below.
