Recent poll shows most Canadians believe real estate prices will keep growing

Although housing prices have reached record high levels during the COVID-19 pandemic, Canadians still believe they can rise even higher.

According to a recent survey by Yahoo/Maru, 68% of respondents expect real estate prices to keep growing during the next year or two.

Québec showed the largest number of Canadians sharing this opinion (75%). Then follow British Columbia (72%), Ontario (68%), Atlantic Canada (62%), Manitoba/Saskatchewan (58%), and Alberta (57%).

The majority of respondents (84%) noted that home prices were up in their community, with 49% of them pointing to a sharp increase and 35% – to a gradual one.

Meanwhile, 15% said prices remained almost unchanged, and 1% noticed a decline.

The central bank’s Governor Tiff Macklem says that when people predict further home prices growth, it’s a worrying signal about the real estate market. He already sees some early signs of it and though in his opinion it isn’t a major worry, Canadians are still taking on too much mortgage debt.

“It’s a worrying sign that Canadians believe there’s still room for prices to go up, and that most of them don’t expect a potential bubble burst in the nearest future,” – noted Maru’s executive vice-president John Wright.

The survey shows that 32% of respondents believe real estate prices are a bubble that will explode, and when it happens, the prices will go down sharply.

This opinion is most strongly shared in Alberta (43%) and Manitoba/Saskatchewan (42%), followed by Atlantic Canada (38%), Ontario (32%), British Columbia (28%), and Québec (25%).

According to 67% of them, the bubble will burst next year.

Growing interest rates may negatively influence housing prices. Fixed mortgage rates are already going up, and the Bank of Canada has pointed to a sooner-than-expected possible increase of its overnight rate, meaning also higher variable mortgage rates.

“The main question is whether the BoC really starts raising lending rates in the spring. In case it hints at it, we may see a wave of homebuyers hurrying to get cheap money and purchase properties that will probably push demand and prices higher,” – noted Wright.

“In addition to it, we could also see more homeowners who want to sell at a peak demand time and move somewhere else”.

The poll of 1,509 Canadian was conducted on November 2, 2021, with an estimated margin of error of +/- 2.5%, 19 times out of 20.