Covid disrupt housing market expected by several Canadian
Moody’s: Significantly lower home prices expected in several Canadian markets
Ephraim Vecina
Mortgage Broker News
While federal financial aid and mortgage deferrals have propelled some price growth recently, it will be only a matter of time before the full negative impact of the COVID-19 pandemic works its way through the housing market, according to a new report by Moody’s Analytics.
In its newest Canada Housing Market Outlook, Moody’s said that the housing market’s fundamentals will weaken in 2021 as mounting unemployment and lower purchasing power will keep a substantial number of consumers from entering the market.
“House prices are set to fall from their current levels,” Moody’s said. “However, the speed of the drop will vary considerably across provinces. All regions will experience price declines, but the Prairie provinces will register the most sizable peak-to-trough decline.”
Nationally, the average decline will be a little over 7% next year. Calgary and Edmonton will see the largest drops at roughly 10% each, with oil continuing to exhibit weakness on a global stage. Regina will have a 9% downturn, while Toronto will reach nearly the same decline. Vancouver prices are projected to decline by less than 7%.
“High unemployment and lower income will restrain buyers’ return to the market,” according to report author Abhilasha Singh. “So will affordability issues in Vancouver and Toronto. Further, slower in-migration flows to Canada due to COVID-19 disruptions will weigh on housing demand. Not even lower interest rates will be enough to save the housing market.”
Fortunately, all is not lost for the less-than-populous markets.
“We expect greater resilience in lower-density markets outside Canada’s large urban cores,” Moody’s said. “The pandemic has boosted demand for properties offering more space for working from home and fewer shared areas with neighbours. Smaller markets where such properties are more affordable will particularly benefit from this trend.”
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