Some markets cooling off amid NBC’s recent interest hike

The idea of buying and owning a house has become increasingly difficult for many Canadians over the past two years.

Remember the beginning of the pandemic, when housing prices dropped drastically and the rate of home ownership shot up to record highs? It won’t return to the same level however, with the recent interest hike, Canadians can expect to see housing prices dropping across Canada in the coming months.

Read More: Rate Hikes To Lead To House Price Fall?

Though it would be nice, not all cities will see the same price drops due to the different economic states in the provinces. Director and senior economist at BMO, Robert Kavcic reports that although housing prices are recalibrating across Canada, the speed and volume won’t be the same everywhere.

The Average Price

Last week, the Canadian Real Estate Association (CREA) released a revised report, highlighting the national statistics of housing prices. Based on recent figures, last month, the national average home price was $637,673, revealing a 3.9% decrement from August 2021.

Though this might be the national average, it’s important to consider the heavy influences of two markets in particular. The Greater Toronto Area (GTA) and Greater Vancouver have some of the steepest sales and prices in the housing market, so their numbers have a significant impact on the average.

Considering the situation in Toronto, the average home price dropped 12.4% to $760,400 in August after prices peaked in March. However, based on predictions some Canadian cities will see a steeper drop than others.

Read More: NBC’s Interest Rate Hike Speculated To Bring Mortgage Market Stabilization

In March 2022, a report was released by the Canadian Mortgage and Housing Corporation outline the impacts of incoming interest rate hikes on the housing markets.

In light of the incoming price drops, the report notes that the steepest declines will align with the cities that saw the steepest price increases in 2021.

Taking this into account, the GTA and Greater Vancouver is likely to see steeper declines while cities like Ottawa and Montreal are recalibrating in a moderate fashion.

Suburb vs. Downtown

Although markets are expected to drop across Canada, a recent Bloomberg report points to new data showing that plummeting prices may not be equally distributed throughout cities. When the pandemic hit, we were all confined to our homes, leading to everyone wanting more space.

The best place to find space and big backyards are, of course, the suburbs, hence the increase in purchasing suburban homes during the pandemic. With the shift to remote work, that made sense for many Canadians.

Read More: Home Prices Could Fall More Than 12% By Next Year

But now that businesses and services in cities have reopened and workplaces are shifting to hybrid work, the interest has dropped in suburban homes. As stated in the Bloomberg report, a hybrid work model and the reopening of downtown businesses and offices may impact the housing market once more.

Market Forecast for 2023

As the Canadian housing market continues to go through changes and we see prices drop, this has left many wondering what’s to come next year. Just over a month ago, Dejardins released an updated report predicting that the decline in housing prices will continue into next year.

At the end of 2023, it is still projected that Canadian property prices will be greater than they were before the pandemic.