Experts Forecast a Shift in Canadian Home Prices

An increasing number of economic forecasts expect Canadian house prices to drop in the near term. Some of the forecasts are suggesting declines of around 25 per cent or more. The most recent report came from Capital Economics, which explained the surge in interest rates may pose a risk to the housing market.

Some bond markets are expecting the Bank of Canada’s policy rate to reach 2.50 per cent by next year. As a result, Capital Economics economist Stephen Brown asked “can the housing market withstand a return to pre-pandemic mortgage rates, even though the prices have risen by more than 50% in the interim? The answer is a firm ‘no,’”

Brown said if variable mortgage rates reached 2 per cent, the house price increases should slow to “little more than zero” next year. An even higher policy rate would cause a decline in house prices. The most recent forecast from Oxford Economics expects home prices to fall 24 per cent by mid-2024.

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