According to a report released Thursday by the Canada Mortgage and Housing Corporation, the number of homes to change hands could climb to 602,300 this year, from about 550,000 sales last year, according to a report released Thursday by the Canada Mortgage and Housing Corporation. 4,649,400 (approximately US $ 533,000), an increase of 14% over last year.
Low interest rates, combined with a demand for more space to weather the pandemic, have pushed the Canadian housing market to extraordinary heights over the past year, with annual price increases of more than 30% in some communities. With vaccine distribution accelerating and the economy recovering faster than expected, some of the drivers of the frenzy may begin to ease.
“Economic conditions are expected to return to pre-pandemic levels by the end of 2023, if broad immunity to COVID-19 is established by the end of 2021,” said Bob Dugan, economist in CMHC chief, in a press release included in the report. “This includes the pace of home sales and prices, which we expect to see moderate from 2020 highs over the same time frame.”
With faster economic growth, CMHC predicts that the standard five-year mortgage rate in Canada will increase, although it will likely remain at very low levels by historical standards. Unusually high savings rates – driven by people with fewer options to spend during the pandemic – are expected to decline, the agency said.
The increased demand for single-family homes caused by intermittent lockouts, meanwhile, will prompt developers and construction companies to move in that direction, CMHC predicted. Renewed immigration will bring demand for rental housing back to cities that have seen vacancy rates rise and rents fall.
Amid this confluence of factors, CMHC predicts that the number of homes sold in Canada in 2022 and 2023 will be lower than this year, but still higher than the number of homes sold in 2019.
Prices are expected to continue to rise, with the average price reaching 4,704,900 by the end of 2023, according to the CMHC report.