Optimism on real estate prices reaches a new record in Canada

The recent weekly survey shows that confidence in the national real estate market keeps growing in Canada, despite the fact that the country has faced another wave of COVID-19, slowing down the economy.

According to Nanos Research Group, 45% of respondents expect home prices in their neighborhood to go up during the next six months – it’s the highest number since mid-March, when mass shutdowns started. Meanwhile, only 13% predict prices declines, which is the lowest number over the same period.

The real estate sector has been a bright spot for the previous several months. Due to extremely low interest rates and a switch to working from home, the demand skyrocketed amid restrained supply. As a result, home prices reached record high levels in many Canadian markets.

“The low-interest-rate conditions are a strong driver for demand,” – Beata Caranci, chief economist at TD Bank, noted. “It has improved housing affordability for many Canadians, who were waiting on the sidelines.” In addition to it, low rates also provide a possibility for homeowners to save money by refinancing their mortgages.

The sales to new listings ratio, which determines a market balance, is at its highest level in 20 years, which means that demand exceeds the supply at the housing market significantly.

Reported optimism in the real estate market offsets increasing concerns over other segments. In October, an overall consumer confidence was down for the first time since the start of the pandemic, as we can see signs of an economic recovery slowdown. The Bloomberg Nanos Canadian Confidence Index fell from 53.1% in September to 52.5% last month.

Each week, Nanos Research polls 250 Canadians concerning their views on personal finances, job security and their forecasts for the economy and housing prices. Bloomberg releases four-week averages results, based on 1,000 responses. The real estate component was the only one reporting improvements in October.

Although the overall confidence dropped, there was still a small rebound at the end of October, which finished previous four weeks of decreases.