A surge in interest rates could drag national home values down by five per cent by the middle of 2023, but would not lead to a collapse in prices, according to a new report from Canada’s housing agency.
The report, authored by Canada Mortgage and Housing Corp. chief economist Bob Dugan, forecasts scenarios for aggressive and moderate rate-hike paths, in each case projecting that a broader economic slowdown and raging inflation will weigh on prices and slow the pace of home construction.
In the high-rate scenario — in which the policy rate would hit 3.5 per cent in early 2023 — national average home prices would fall five per cent to as low as $742,970 in the second quarter of that year before steadily climbing back up. The number of homes changing hands would also decline 34 per cent compared to sales volumes seen in early 2022.
Source: Financial Post