View as Webpage

OCTOBER 2022 HOUSING REPORT CHILL IN THE AIR: SURGING INTEREST RATES AND THE HOUSING MARKET

According to the Moody’s Analytics and RPS Real Property Solutions housing outlook report released today, the Canadian housing market is poised for a rougher landing in the next few years, though it will begin to recover in late 2024.   With the rapid increase in mortgage interest rates since the start of 2022 and more to come in the near term, the underlying dynamics of the housing market are changing, putting homeownership outside the reach of millions of would-be first-time homebuyers.   The combination of increased borrowing costs, elevated inflation, and a softening labour market spells the end for the housing boom. We project house prices will suffer a peak-to-trough decline over 10% by early 2024.

About the Report The RPS and Moody's Analytics exclusive report on the Canadian Housing Market outlines nationwide and region-specific real estate predictions, trends and scenarios. Read the latest RPS - Moody's Analytics Canada Housing Market Report.

Report Highlights On average, the Canada metro areas will experience significantly slower house price growth over the next five years, though not evenly. The Toronto and Vancouver areas are overvalued and will continue to experience downward house price pressure due to reduced affordability, however, house prices in Toronto have shown less sensitivity historically and will likely experience less downward pressure. Alberta and Saskatchewan will do better despite weaker economic fundamentals because they have retained better afford­ability, while Montreal will see downward pressure on house prices for at least the next year.

The ra­tio of average homeownership costs to average household disposable income, as measured by the Bank of Canada’s affordability ratio, has recently risen to its highest level since the late 1990s. The RPS Metropolitan Composite Index—a weighted average of 13 major metropolitan areas—fell for the second consecutive month in August, causing the year-over-year appreciation in house prices to decelerate to 13.8%, its slowest pace in a year and a half.

Download the Full Report

About the RPS – Moody’s Analytics House Price Forecasts The RPS – Moody’s Analytics House Price Forecasts are based on fully specified regional econometric models that account for both housing supply-demand dynamics and long-term influences on house prices such as unemployment and changes in mortgage rates. Updated monthly and providing a 30-year forward-time horizon, the forecasts are available for the nation overall, its ten provinces, 33 metropolitan areas, and more than 2500 sub-metro areas and cover three property style categories, comprising single-family detached, condominium apartments and aggregate, in a number of scenarios: a baseline house price scenario, reflecting the most likely outcome, and six alternative scenarios.  For more information, please visit our website or send us email to sales@rpsrealsolutions.com. 

Learn more