High unemployment, lower immigration to restrain Canada housing market: Reuters poll

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Canadian house prices will rise at a much slower pace this year than predicted only three months ago and will fall in 2021 as the coronavirus pandemic pushes up unemployment, curtailing immigration and the demand for homes, a Reuters poll showed.

FILE PHOTO: An apartment building is lit by the dawn sun in Toronto, Ontario, Canada April 23, 2020. REUTERS/Chris Helgren

While Canadian home prices rose 0.1% in the month of May, yielding the strongest annual gain in two years, the June 9-23 poll of 17 economists and housing market analysts showed average house prices across the country would rise just 1.5% this year compared with the 4.5% forecast in a March poll. “A small but not negligible share of job losses recently will end up in long-term unemployment. Also, COVID-19 anxiety weighs down on labour market prospects, delaying housing purchases. A key risk specific for Canada is tied to the achievement of the federal immigration targets, which underpinned housing demand in recent years.”

Demand for housing this year is expected to fall across the country, including in Toronto and Vancouver, said more than three-quarters of respondents. Asked how quickly Canadian housing market activity would recover to pre-COVID-19 levels, 12 of 17 analysts said it would be gradual. Three said it would be slow and long while the remaining two said activity had already recovered.

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