In 2022, the level of home sales and the pace of price growth will remain elevated compared to long run averages but will moderate from their respective 2021 peaks. Over the 2023-to-2024 period, these trends will continue, reflecting the impact of higher mortgage rates and lower housing affordability on housing demand. This according to the latest Housing Market Outlook released by Canada Mortgage and Housing Corporation (CMHC).
Housing sales and price growth will fall more in line with historical averages by late 2023 or early 2024, but elevated price levels will persist since price growth will remain positive. These factors will place greater pressure on the affordability of entering homeownership.
Recent rental market trends are also expected to continue over the forecast period. Downward pressure on rental vacancy rates and upward pressure on average rents will likely continue to affect rental affordability.
Housing starts will also moderate from 2021 highs but remain above historical averages. This reflects expected support for new home construction to address current and growing housing supply gaps.
Over the course of 2022, CMHC will be publishing a series of reports to help deepen its understanding of housing supply challenges in Canada and to ultimately inform better policies and decision making.
- Growth is expected in prices, sales levels, and housing starts to moderate from recent highs but remain elevated in 2022. Robust GDP growth, higher employment and net migration will support demand.
- In 2023 and 2024, the growth in prices will moderate with sales and starts activity remaining above long-run averages. Home ownership affordability will decline, with the growth in prices expected to outpace income growth. Rental affordability is also set to decline from increasing rental demand and low stocks of rental housing.
- The growth in prices will likely continue to be led by markets with already low listings, including Vancouver, Toronto, and Montreal.
- Supply constraints on construction will continue to impact the major centres of Vancouver and Toronto, highlighting the central role of housing supply in determining affordability.
- The Prairie provinces, led by Alberta, will likely see relatively strong sales and starts levels and be stimulated by energy sector investments and higher energy and commodities prices. The growth in prices is predicted to remain well-below the national average reflecting greater balance between supply and demand than in other regions.
- Ontario, Quebec, and British Columbia will likely see the strongest price gains in 2022. This will largely reflect tighter supply constraints than in the rest of Canada. The growth in prices is expected to slow by the end of 2024.
- The Atlantic region will likely see continued upward pressure on housing activity and growth in prices from high inter-provincial migration. The level of home prices will remain relatively low in comparison to the overall Canadian average.
SOURCE Canada Mortgage and Housing Corporation
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