In its September macroeconomics report, RBC noted that it expected housing sales in Canada to decline by up to 20% in 2022.
The current market, one RBC calls 'in transition', has of been on fire since the second quarter of the pandemic in July 2020. A remarkable run that saw the national average sale price reach $662K in July 2021, up 15.6% year-over-year. In many of the country's 18-hour cities, including Halifax and Hamilton, housing prices have risen as much as 20-30% in the same time period, reaching their peak in March of 2021.
A deep shortage of housing inventory has led to a decrease in overall sales throughout the summer, but has also contributed to prices continuing to rise, given the steep competition for any available properties.
Last month, RBC declared that the risk of overheating in the market had lessened, something they believe will carry into 2022. For homebuyers looking to get into the market, conditions will continue to remain tight, but prices -- while still expected to climb -- will be more tempered.
This is very good news for anyone feeling priced out of the market, given that June 2021 marked the largest National Composite House Price Index (HPI) 12-month gain on record (16%). This new record surpassed the 14.2% rise recorded in June 2017, which itself heralded the introduction of new government measures to restrain home prices. Were the next 12 months to match the growth seen from June 2021 to June 2022, the average price of a home in Canada next summer would be more than $765K.
While RBC notes that national sales have already dropped 20% from their March 2021 highs, they forecast sales will decline a further 20% in 2022. Combined, this may sound like a massive fall, but the reality is that this "pace will still be above the 10-year average."
Prices too, in comparison to the record-setting year the market has seen over the past 12-months, are also expected to "post a more modest gain in 2022."
The Canadian Real Estate Association (CREA) is expected to release its latest monthly numbers for August later this week, providing further insight as to how Canadian homebuyers (and sellers) spent the end of their summers.
You can read RBC's full macroeconomics report here.
