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Highlights
Recent policy actions and rising interest rates will take the wind out of home prices’ sail this year in Canada. We expect aggregate prices to inch higher by only 1.8% nationwide in 2018 after surging by more than 10% on average in the past two years. Ontario’s Fair Housing Plan triggered the cooling process in April 2017 and three interest rate hikes since July reduced the market’s heat even more. The new stress test for uninsured mortgages, measures announced in the 2018 BC budget and the prospect for further interest rate hikes will keep homebuyers on edge in 2018. We project home resales to dip for a second-straight year—something Canada hasn’t seen since the mid-1990s. Most of this decline in activity will be concentrated in Ontario and British Columbia. Policy measures and rising interest rates will also compress buyers’ budgets applying further downward price pressure. Still, we see the risks of a major price correction nationwide as contained. We expect demand-supply conditions to remain balanced in the majority of local markets, including in Ontario and British Columbia. Solid economic and demographic fundamentals will maintain steady support.
Link to the full report
To view, print and download the new report, click on the following link:
http://www.rbc.com/economics/economic-reports/pdf/canadian-housing/housingforecastMay2018.pdf
Recent policy actions and rising interest rates will take the wind out of home prices’ sail this year in Canada. We expect aggregate prices to inch higher by only 1.8% nationwide in 2018 after surging by more than 10% on average in the past two years. Ontario’s Fair Housing Plan triggered the cooling process in April 2017 and three interest rate hikes since July reduced the market’s heat even more. The new stress test for uninsured mortgages, measures announced in the 2018 BC budget and the prospect for further interest rate hikes will keep homebuyers on edge in 2018. We project home resales to dip for a second-straight year—something Canada hasn’t seen since the mid-1990s. Most of this decline in activity will be concentrated in Ontario and British Columbia. Policy measures and rising interest rates will also compress buyers’ budgets applying further downward price pressure. Still, we see the risks of a major price correction nationwide as contained. We expect demand-supply conditions to remain balanced in the majority of local markets, including in Ontario and British Columbia. Solid economic and demographic fundamentals will maintain steady support.
Link to the full report
To view, print and download the new report, click on the following link:
http://www.rbc.com/economics/economic-reports/pdf/canadian-housing/housingforecastMay2018.pdf