By Ketki Saxena
Investing.com – Canadian home prices fell in the fourth quarter but remained well above pre-pandemic levels, as per a report from Royal LePage.
Royal LePage reported that Canadian housing prices marked their first year over year decline in 2022 since the financial crisis in 2008. The Royal LePage House Price Survey showed national aggregate home price dropped 2.8 % year-over-year in the fourth quarter, to $757,100.
However, the report further noted that the headline home price declines are not as significant as may seem: less than 113,000 resale transactions - or just 0.68% per cent of all homes - took place in the months when peak housing prices were recorded.
Essentially, only a very small percentage of Canadians bought houses at peak pricing, and are actually experiencing the declines seen so far (or likely to see the peak to trough forecasted for the coming year).
Phil Soper, president at Royal LePage commented, “About half of one per cent of Canadian homeowners who purchased homes during the final excess of the pandemic in the first quarter of 2022 whose homes are worth less now than what they paid for them”.
On another positive note for homeowners, the agency believes that the declines have already happened, taking place from rom April 2022 through the end of last year. Royal LePage believes that we have now “reached a point where things have flattened out”.
“Home prices will be down from where they were at the beginning of last year but they’re not declining further.”
Looking forward, Royal Le Page expects the Canadian housing market to rebound quickly as interest rate hikes slow this year - and “perhaps even uncomfortably quickly” as supply remains constrained, employment remains high, and record levels of immigration support the demand for Canadian housing.
Soper noted, “While the red-hot market conditions are behind us, there remains a widespread shortage of homes in Canada that cannot be offset by temporarily cooling demand,”
“Soon enough, these buyers will return to the market and will be met, once again, with the realities of low inventory and much competition.”
Overall, Soper reiterates that “Canada’s housing stock is in good shape. Canadian homeowners are in good shape. And it’s highly unlikely that we’ll see a surge in defaults and foreclosures”.