Average Canadian Home Prices Expected to Fall 9% This Year - Reuters Poll

© Reuters.

By Ketki Saxena

investing.com --  In a Reuters poll,  property analysts surveyed anticipate that average home prices in Canada will experience a decline of approximately 9% this year before rebounding with growth into 2024 and beyond. This forecast is based on the belief that interest rates have already reached their peak alongside robust demand for housing.

The Bank of Canada (BoC) had increased interest rates swiftly from nearly zero at the beginning of last year to 4.25% in January; however, this has not significantly impacted home prices. In fact, since March last year, home prices have only dropped about 15%, following an impressive surge of over 50% since early 2020 due to the onset of the COVID-19 pandemic. 

After the Canadian central bank decided on a conditional pause regarding rate hikes in January—while its U.S. counterpart continued raising rates—home prices within Canada began to rise once more. As per one measure, they are up by an accumulated total of around 17% so far this year.

A Reuters poll conducted between May 15th and June 5th included input from eleven analysts who predict roughly a 9% decrease in home prices for 2023. This prediction is less severe than the 12% drop projected in a poll from three months prior and the reported 12% year-over-year decline in April by the Canadian Real Estate Association.

The same analysts anticipate that average home prices will experience an increase of about 2% and 4% for 2024 and 2025, respectively—projections that align closely with median predictions from previous polls.

Although it is expected that the BoC will maintain interest rates throughout this year, strong evidence of economic performance and persistent inflation may force them to reconsider rate hikes once again.