Canada Housing Market Outlook: Values, Volumes and Vertigo
by Laura Forester | June 21, 2021
According to the June 2021 RPS - Moody's Analytic's Housing Outlook, the Canadian housing market is running hot but will slow down in 2021, though the exact timing is difficult to predict.
The combination of restricted mortgage lending and the expectation of higher mortgage rates suggests that house prices are likely to experience a slowdown in the next year and a half. Moreover, affordability as measured by the ratio of median dwelling price to median family income is also at a record low, making it difficult for house prices to maintain the same momentum as before.
The short-term house price outlook calls for slower appreciation over the next year and a half, with a subsequent pickup. House price appreciation in Toronto, Montreal and Vancouver will go through a short but significant slowdown that will bring prices closer to long-term trend values.
House prices in Calgary and Edmonton are below their trend value and will moderate slightly. Despite this slower short-term outlook, the medium- and long-term outlook is looking substantially better, due in part to the deceleration of house prices in Toronto and Vancouver.
More stringent mortgage lending will improve housing affordability and debt service ratios in the
long term, reducing the possibility of an extended house price correction.