A new report from the Canadian financial services company Desjardins says the Canadian housing market has reached “a turning point”.
Housing prices have been falling steadily since the Bank of Canada began raising interest rates to fight inflation. Desjardins says the average home price in Canada fell 2.6 percent month-on-month in March and 3.8 percent in April.
These reductions should continue, the report says, and will be most significant in Ontario, where house prices could fall by as much as 18 percent.
“We expect that the correction in the Ontario housing market will be driven by a reduction in sales activity and prices in smaller malls outside large urban areas,” the report said.
“We believe that prices will fall more in communities that have seen the biggest price increases during the pandemic and therefore the greatest erosion in affordability.”
As a result, many areas just hours outside of Toronto will see prices fall, the report said.
From these areas, Bancroft could see the biggest drop in prices, followed by Chatham Kent and Windsor-Essex, the report said.
(Source: Desjardins)
Toronto real estate agent Desmond Brown told CTV News Toronto that he “always believed that the first communities to feel a drop in prices would be the remote communities around Toronto.”
“The price sustainability we saw was completely unrealistic,” Brown said.
Because of this, he estimates that prices in these areas could soon fall to pre-pandemic levels.
TORONTO PRICES MAY REMAIN HIGH#
While rural areas could soon see falling prices, Brown says he believes the Toronto market will be slower to cool.
“Toronto has a much better chance of keeping prices higher than in remote communities,” he said. “This is because the city is the economic machine of the country [and] “There is still a huge demand for people living in Toronto, although we are seeing more of a hybrid work model these days.”
The report cites Toronto as the last five areas to expect price reductions.
With files by Tom Yun
