It's previously been announced that the number of new homes being built and sold, as well as home prices in Canada, are expected to fall as a result of COVID, and now it's being said that we can expect property prices to fall, too.
Next week, the Bank of Canada is set to release its latest policy rate decision and, in the lead up to the announcement, Finder.com has released the results from a recent survey it conducted that featured forecasts from 15 Canadian economist. The majority of those economists believed the Bank will hold the overnight rate on June 3.
What's more, the survey results also revealed that, of the 10 panellists who gave property price forecasts, the average economist believed a property price decrease of just over 8% would be seen across Canada’s major cities.
For the survey, Finder asked its economist panellists to assign a percentage value for any anticipated price decreases in 10 of Canada’s major markets.
Unsurprisingly, property prices in Canada's largest housing markets – Vancouver and Toronto – are forecast to decline the most at 12.65% and 12.55%, respectively. Montreal, Calgary, Hamilton, and Edmonton are set to see price drops within the 8-10% range.
Meanwhile, cities like Ottawa, Quebec City, Halifax, and Winnipeg are forecast to experience more modest declines within the 4 to 6% range.
Finder says a likely contributor to declining property prices can be linked to an increase in mortgage arrears, which in Canada, currently sits at about 0.2%. Recently the Bank warned of a worst-case scenario that would see Canada's rate peak at 0.8%, which is about twice as high as it was at its peak during the last major recession in 2009.
When Finder asked the panellists what they thought the rate would peak at, three of the eight who answered said it would peak at 0.6%, a little lower than the bank’s worst-case scenario. However, when all estimates were averaged, they were completely in line with the bank’s predicted 0.8%.