Real estate prices may go down in Canada

The recent report says the pandemic will hurt Prairie real estate prices most of all in the country. However, even Toronto and Vancouver will face prices declines amid growing rental market vacancies and lower immigration rates.

According to Moody’s Analytics and RPS Real Property Solutions Inc. forecast, an average single family detached house price will go down by 6.7% in 2021 because of the weaker economic recovery, less economic stimulus and debt problems growth. The possible decrease for all housing types exceeds 7%.

Calgary and Edmonton are expected to show the largest drops by 10% in 2021, with Regina following with its decrease by more than 9%. Toronto may show almost a 9% drop, and Vancouver prices are expected to fall by less than 7%.

“The real estate market will not avoid weak conditions of the labour market as vacancy and delinquency rates may go up next year,” – says the report author Abhilasha Singh. “Nevertheless, although all regions will face price drops, the size of the influence will be different across them.”

“High unemployment and lower income will prevent buyers from coming back to the housing market,” – Singh believes. “As well, as the affordability issues in Vancouver and Toronto. Moreover, slower immigration to Canada will also affect the housing demand, and even lower interest rates will not be enough to save the real estate market.”

The report expects housing starts to go down to 151,000 units by the third quarter of 2021, compared with 206,000 in Q1 of 2020. However, the market will recover next year after vaccines are widespread, and prices for single family dwellings are expected to go up by 4.6% in 2022, Singh says.

One positive trend comes from city dwellers, who have to work from home and now are looking for suburban properties with larger spaces.

“The pandemic has increased the demand for properties providing more space for working from home and fewer common areas with neighbours,” – Singh noted. “Smaller markets with such affordable units will definitely benefit from this tendency.”