Mar 8, 2023
Rent prices likely to plateau amid Bank of Canada rate pause: Experts
, BNN Bloomberg
No economic growth indicates monetary policy will continue to bring down inflation: Chief economist
VIDEO SIGN OUT
The Bank of Canada’s decision to keep interest rates on hold could bring rent prices across the country to a standstill, according to real estate market experts.
The central bank announced the first pause in interest rates after eight consecutive hikes, keeping the rate at 4.50 per cent on Wednesday. The move will likely bring homebuyers who were previously sitting on the sidelines back into the resale home market and easing the demand for rental units, experts explained.
“The bank pausing rates will push people back into the housing market and alleviate some pressure off the rental market that should cause prices to plateau,” John Pasalis, president of Realosophy Realty, said in an interview on Wednesday.
He added that it’s likely we’ll see stabilization in rent costs for the second half of this year, as rent either flattens or slows.
“The string of interest rate hikes up until now led to a massive run up in rent prices, and it feels like we’re hitting a bit of a ceiling on what people can afford,” Pasalis said.
That sentiment is echoed by one realtor who has seen clients searching for prices that he says simply don’t exist at the moment.
“Renters have been forced to swallow the pill of higher living and housing costs, and I think BoC interest rate pause will be a good thing for them,” James Carniello, realtor at Royal Lepage, said in an interview on Wednesday.
The BoC's decision to take it’s foot off the gas pedal should lead to a temporary downturn in rental prices as clients look to buy homes instead of renting them in this climate, he explained.
“We’ll likely see some small drops in rental prices over the next few months, totalling to a decline of $50 to $100, or, a standstill in prices,” he added.
Despite the optimism, Carniello noted that in the long-run most regions continue to battle with a supply shortages which will keep rental prices elevated as the population grows.
“At the end of the day it still really comes down to a supply issue, and the focus needs to be on bringing more housing units to the market,” he said.
The central bank announced the first pause in interest rates after eight consecutive hikes, keeping the rate at 4.50 per cent on Wednesday. The move will likely bring homebuyers who were previously sitting on the sidelines back into the resale home market and easing the demand for rental units, experts explained.
“The bank pausing rates will push people back into the housing market and alleviate some pressure off the rental market that should cause prices to plateau,” John Pasalis, president of Realosophy Realty, said in an interview on Wednesday.
He added that it’s likely we’ll see stabilization in rent costs for the second half of this year, as rent either flattens or slows.
“The string of interest rate hikes up until now led to a massive run up in rent prices, and it feels like we’re hitting a bit of a ceiling on what people can afford,” Pasalis said.
That sentiment is echoed by one realtor who has seen clients searching for prices that he says simply don’t exist at the moment.
“Renters have been forced to swallow the pill of higher living and housing costs, and I think BoC interest rate pause will be a good thing for them,” James Carniello, realtor at Royal Lepage, said in an interview on Wednesday.
The BoC's decision to take it’s foot off the gas pedal should lead to a temporary downturn in rental prices as clients look to buy homes instead of renting them in this climate, he explained.
“We’ll likely see some small drops in rental prices over the next few months, totalling to a decline of $50 to $100, or, a standstill in prices,” he added.
Despite the optimism, Carniello noted that in the long-run most regions continue to battle with a supply shortages which will keep rental prices elevated as the population grows.
“At the end of the day it still really comes down to a supply issue, and the focus needs to be on bringing more housing units to the market,” he said.
