Home prices will drop even if worst-case scenario is avoided: CMHC CEO

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Canada Mortgage and Housing Corporation President and CEO Evan Siddall warns the domestic housing market is not out of the woods yet.In an interview with BNN Bloomberg’s Amanda Lang on Thursday, Siddall said that while the most bearish case in house prices doesn’t seem likely to materialize, he still sees prices drop just under 10%. due to economic shocks. of the COVID-19 pandemic.

“The number of people on income support, the number of people on mortgage deferral, means that at some point, probably early next year to the middle of next year, there will probably be a negative adjustment in house prices, ”he said. “In general, we think that a [percentage] a negative adjustment is what we can expect in most markets. ”

CMHC released a forecast in May warning that average home prices in the country could plunge as much as 18% in a worst-case scenario due to the pandemic and its impact on economic growth, jobs and loss. of income.

Siddall told BNN Bloomberg that various income support measures implemented by the federal government have helped the Canadian housing market avoid this worst-case scenario.

“It’s really a trajectory dependent forecast. It was ‘the pandemic was going to be horrible, deep’ and it was bad enough, but government income support, government budget support, government monetary policy support helped alleviate some of those pressures ” , did he declare.

However, Siddall warned that the impending cut in federal support would lead to higher unemployment and further loss of income, causing home prices to deflate.

“Ultimately it requires economic adjustment and in some businesses there will be unemployment as a result,” he said. “And unemployment is the kind of thing that drives prices down.”



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