Canada’s housing market will remain strong for the foreseeable future, according to the federal housing agency.
In its latest forecast, Canada Mortgage and Housing Corp. (CMHC) says the country’s residential real estate market will slow from the "unsustainable" levels seen so far this year, though sales will remain at an elevated pace and prices will continue to climb for years to come.
The number of homes forecast to change hands could climb as high as 602,300 this year from about 550,000 sales in 2020, according to CMHC. That could push the average price for a home in Canada as high as $649,400, a 14% increase from last year.
Low interest rates, combined with a demand for more space, have pushed the Canadian housing market to extraordinary heights over the past year, with annual price gains of more than 30% seen in some communities.
With vaccine distribution accelerating and the economy recovering quicker than expected, some of the drivers of the housing market may begin to unwind, according to CMHC.
With faster economic growth, CMHC predicts Canada’s standard five-year mortgage rate will rise, though it will likely stay at very low levels by historic standards. Unusually high savings rates -- driven by people having less opportunity to spend money during the pandemic -- are expected to fall in coming months.
CMHC also predicts that renewed immigration will bring demand for rental accommodation back to cities that have seen vacancies rise over the past year. The number of homes sold across Canada in 2022 and 2023 will be less than this year, though still more than the number sold in 2019, forecasts CMHC.
Home prices are expected to keep on rising, with the average price going as high as $704,900 by the end of 2023, the CMHC report states.
