According to Desjardins, the average home price in Canada will drop from its peak in February of this year by about 25% by the end of 2023.
Desjardins revised its prior projection, which expected a 15% decline in the average home price over the same time, and now expects a significant correction in the housing market in its most recent residential real estate outlook, which was released on Thursday.
According to Desjardins, both worse housing data and a more aggressive monetary policy than anticipated are to blame for the deteriorated prognosis.
Mortgage borrowing rates increased after the Bank of Canada hiked its benchmark interest rate by one percentage point in July, and more hikes are anticipated this year.
The report also points out that, in each of the three months that followed February, when the national average home price reached a record $816,720, housing prices fell by more than 4%.
Prices are still anticipated to be higher than the pre-pandemic level at the end of 2023, despite the forecast’s revision.
Regionally, the survey claims that New Brunswick, Nova Scotia, and Prince Edward Island, where prices soared during the pandemic, will likely see the highest price corrections.
This modification is assisting in restoring some rationality to Canadian real estate, the report stated, “although we don’t want to minimize the challenges some Canadians are enduring.”
Additionally, the authors point out that the impending economic slowdown will reduce inflationary pressures to the point where the Bank of Canada can start rolling back interest rate increases. Late next year, according to Desjardins, the Canadian housing market should normalize.