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Canada’s housing market is expected to show more balanced activity in 2023, with home prices forecast to decline in the country's priciest regions, a Re/Max report shows.
Re/Max brokers and agents are expecting 60 per cent of Canada’s housing market to return to balanced activity next year, with an average 3.3 per cent drop in home prices, the report released Tuesday shows.
The slowdown in housing will be fuelled by rising interest rates and the risk of a recession, it states.
The largest home price declines are expected in the Greater Toronto Area (GTA) and the Greater Vancouver Area (GVA).
The average residential home price in some pockets of these two regions is being forecast to drop by up to 15 per cent, the report revealed.
Home prices in the GTA could drop by 11.8 per cent next year as interest rates increase, unemployment rises and a possible overall economic slowdown takes hold, the report states.
Quebec City is also predicted to see home prices decline by 10 per cent, the report revealed. While in the GVA, home prices are projected to fall by five per cent.
“It’s good to see the majority of markets moving toward more balanced conditions, which is typically defined by 45 to 90 days on market. This is a much-needed adjustment from the unsustainable price increases and demand we saw early in 2022,” says Christopher Alexander, president, RE/MAX Canada in a statement.
Home prices in Atlantic Canada are forecast to rise. In Halifax, prices are predicted to climb by eight per cent in the coming months.
Calgary is also forecast to turn into a sellers market, with home prices expected to rise seven per cent in 2023, driven by first-time homebuyers, the report states.
A majority of Canadians (73 per cent) said they still view home ownership as the best long-term investment decision they can make, but despite that sentiment, 45 per cent of respondents said they are worried about how further interest rate hikes will impact their ability to engage in the country’s real estate market.
The report cites affordability and housing supply as two main pressure that are weighing on Canadian homebuyers.
“It’s important that governments work collaboratively to support housing affordability and address the supply challenges that Canadians continue to face, in order to make home ownership feasible for those who want it,” Alexander said.
The findings in the Re/Max 2023 Canadian Housing Market Outlook report are a collection od insights from the Re/Max brokers and agents. The data is gathered by Leger, a full service market research firm.