from the Bank of Canada, RBC downgraded its housing market forecast and is now predicting a 23% drop in home sales this year, followed by a 15% drop in 2023. With demand weakening and affordability stressed, the national benchmark home price is now expected to drop more than 12% from peak to trough by the second quarter of 2023.
Although a more severe and prolonged slump “cannot be ruled out,” RBC expects the correction to end in the first half of 2023, with some markets stabilizing more quickly than others. The average home sale price in Canada is already down 8.6% between the first and second quarter of 2022. Hogue notes that on a quarterly basis, the average price could fall by more than 17% as buyers look to lower-priced markets and housing categories to be able to afford a home.Although many Canadians are just now appreciating how steep the market shift could be, Hogue says the first signs of a correction began to emerge back in March, soon after the Bank of Canada’s first rate hike.
RBC’s forecast projects a 45% drop in 2022 home resales in British Columbia and Ontario, cumulatively, followed by a 38% tumble in 2023. This will set the stage for a home price index drop of more than 14% from quarterly peak to trough in both provinces.