The average house price in Canada could fall nearly 25% by the end of 2023 from the peak reached in February, economists at Desjardins Group predict in their updated real estate market outlook.
Posted at 4:49 p.m
This price decline forecast is also much more pronounced than the 15% forecast that Desjardins economists announced just two months ago when they updated their outlook last June.
Desjardin’s economists attribute this deterioration in their prospects for the housing market to two main factors: the sharp drop in demand from potential buyers and “mortgage rate increases that are more pronounced and faster than ‘expected’.
In Quebec, too, Desjardins economists expect house prices to fall sharply between the peak at the beginning of the year and the expected low at the end of next year.
However, price declines in Quebec, even accentuated from -12% to -17%, promise to be somewhat less pronounced than in Canada as a whole.
“Quebec started falling slightly later than Canada and the fall is much less pronounced. So far, average prices in Quebec have fallen by just under 2%, compared to more than 10% in Canada,” the Desjardins economists state in their analytical report.
But even though “Quebec’s price correction started with a slight delay compared to other provinces, market conditions changed just as quickly. The scarcity situation [d’offre par rapport à la demande] has since evaporated as the number of potential buyers has declined significantly and the stock of properties for sale is beginning to rise again”.
Consequently, “downward price adjustment is expected to continue and [que] the economic bottom should be reached at the end of next year”. However, economists expect the level of average prices to remain around 20% above the level observed in February 2020, just before the pandemic began.
Meanwhile, according to Desjardins economists, the fall in house prices does not appear to be widespread across the province.
“Regional markets that have experienced less or little surplus should fare better. Conversely, the regions where the bidding has been more intense, particularly western Quebec, will see a more brutal landing,” the Desjardins economists expect.