Canada’s house price plunge to be largest in the Maritimes: report
A report from financial institution Desjardin says Canada’s largest drop in the average home price will likely occur in the Maritimes, where prices skyrocketed during the height of pandemic lockdowns.
Desjardins is forecasting the average home price in Canada will decline by nearly 25 per cent by the end of 2023.
Properties across New Brunswick, Nova Scotia, and Prince Edward Island have been consistently selling above asking price, forcing some out of the market.
“When you look at the Maritimes specifically, those three provinces were the chief beneficiaries of the run-up in home prices during the pandemic,” says Randall Bartlett, Desjardin’s senior director of Canadian economics. “They saw the greatest increase in home prices.”
Between early 2021 and early 2022, Canada’s average home price went up 20 per cent to a record $816,720.
“There are a lot of people from central Canada who migrated out to the Maritimes during the pandemic. Now we’re starting to see that people are returning back to work in central Canada. We’re starting to see some changes in the overall migration.”
Desjardin’s previous forecast in February predicted a smaller 15 per cent drop in Canada’s average home price. Desjardin’s most recent report notes a housing price drop of more than four per cent in each of the three months that followed February.
“The pace of correction we’ve seen so far this year has gone way beyond our expectations,” says Bartlett.
In July, the Bank of Canada increased its interest rate by a full percentage point, to 2.5 per cent, the rate’s highest increase since 1998.
“At the time, most economists were expecting something around 50 basis points or more likely 75. But a 100 basis point increase blew the doors off and had immediate implications for borrowing costs for households,” said Bartlett.
“So if you’re someone who bought during the pandemic, certainly this is going to be a period of potential challenges for your household, given the fact that the amount of debt you incurred to buy a home during the pandemic, particularly the closer you got to the peak of national crisis, that debt is going to stay constant even as the value of your home declines.”
In June, a report from the Canadian Real Estate Association said housing markets across the country began the year at historic highs before starting an expected decline.
“For people who are looking to buy into the housing market we’re going to see improved affordability. So for those folks, they’re certainly going to have a better entry point into the housing market than they thought they would have had six months ago or even a year ago.”
Ryan Davison, vice-president of the New Brunswick Real Estate Association, says some potential home buyers priced out of the market may now have an opportunity to “get back in.”
“Now people that might have had to go in with ‘no conditions’ before on a house they didn’t absolutely love might have the time and flexibility to go find a property they truly want, and put in their financing condition, put in their inspection condition, and really be able to assess what they’re getting. “So there is a bit of a silver lining depending on what side of that you’re on.”
Davison expects the Maritime housing market to return to some sort of stability, or least predictability, later this fall.
Wile files from Nojoud Al Mallees of The Canadian Press, and Tara Deschamps of The Canadian Press.
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