'Historic' correction grips Canada's housing market, RBC says
BNN Bloomberg
The housing market correction that’s taking hold in Canada could turn out to be its biggest in recent history, according to a new forecast from the country’s largest bank.
Benchmark home prices could fall more than 12 per cent through early next year from the market’s peak, a bigger decline than any of the four national downturns of the past 40 years, according to a report Friday by Royal Bank of Canada economist Robert Hogue.
Sales are also expected to slump 23 per cent this year and 15 per cent next year, RBC said. That total decline of 42 per cent since early 2021 would outrank the 38 per cent drop in 2008 and 2009.
Canada’s housing market has sharply shifted since the Bank of Canada began raising its benchmark interest rate from record lows in March. The central bank, seeking to rein in inflation that is running at its hottest in four decades, unveiled its largest one-time interest rate hike since 1998 last week. It raised the benchmark rate a full percentage point to 2.5 per cent and promised more increases to come. RBC’s Hogue predicts policy makers won’t stop until they hit 3.25 per cent in October.
