According to a new report by RBC Economics, the housing market of Canada may be heading for a soft landing after a predicted recording breaking year of 2021. The report said that the supercharged demand driven in part by high household savings, low interest rates and improving customer confidence will force the Canadian housing market to new heights. This increase is set to happen post 2020, which was one of the strongest years for housing despite COVID 19 affecting and unsettling life.
Robert Hogue, Senior Economist, RBC estimates that the resale activity of homes will reach 588,300 units in 2021, up from 552,300 units in 2020. He also mentioned that the national benchmark price will rise 8.4 per cent to $669,000, driven mainly by low supply.
“Call it a 2022 soft landing,” signs of the market cooling down will start to emerge towards the end of the year if the pandemic continues to remain a threat to the Canadian economy.
The report mentioned that with the fading of the COVID induced market churn, low housing supply, erosion of affordability and increase in interest rates would be the main factors for the housing market cooling down. RBC forecasts that the seasonally adjusted and annualized resales will be down from the peak of December 2020 of about 700,000 to 515,000 units by the end of this year.
Finally, the report highlights the impact of low immigration level because of COVID-19 will begin to spread out to the rest of the housing market, rather than just be limiting to the rental and condo markets.