A new report by RBC Economics shows that Canada’s housing market is likely to cool down by the end of the year after what may potentially be a record-breaking 2021.
The report published Wednesday said “supercharged” demand-driven in part by low rates, high household savings and improving consumer confidence will continue to push housing market activity in Canada to record highs. The increase is set to take place after 2020 that was likely the strongest year ever for the market despite the COVID-19 pandemic stalling activity in the spring.
In the report, RBC Senior Economist Robert Hogue estimated that home resale activity will reach 588,300 units in 2021, up from 552,300 units in 2020. The national benchmark price will rise 8.4 percent to $669,000, driven mainly by low supply, Hogue wrote.
But signs of a cooling down will also start to emerge at the end of the year, he said.
“Call it a 2022 soft landing,” Hogue wrote, leaving open the possibility of a worse slowdown should the pandemic remain a threat to the Canadian economy despite large-scale vaccine distribution.
RBC forecasted seasonally adjusted and annualized resales will be down from the December 2020 peak of almost 700,000 units to a “still solid” 515,000 units by the end of 2021.
The report says low housing supply, a COVID-induced market slowdown, rising interest rates and eroded affordability will be key factors in the cooling Canadian housing market.
The impact of the low levels of immigration caused by the pandemic, so far only felt in the rental and apartment markets in Canada’s largest cities, could begin to spread to the rest, the report said. back of the housing market at the end of the year.
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