Housing supply will continue to have an outsized impact on affordability, RBC predicts
Major markets like Vancouver, Montreal, and Calgary are likely to post strong, if tempestuous, performances in 2022, according to a new forecast by RBC Economics.
In particular, Vancouver will have to contend with the same challenges that it has been struggling with over the past few months.
“Rock-bottom inventories continue to be a major irritant for buyers as we enter 2022,” RBC said. “Active listings barely increased from a decades-low last month, significantly restraining buying opportunities.”
Participants in bidding wars will be forced to be more aggressive, a trend that has already pushed Vancouver’s benchmark home price up by 18.5% annually to reach a new high of $1.255 million in January.
“We expect tight demand-supply conditions will maintain considerable upward price pressure on all housing types in the near term,” RBC said.
Read more: Canada house prices – what will be the pace of growth this year?
Montreal will continue to see a “dearth” of housing supply for the foreseeable future, which might impact activity later this year, RBC said.
Lack of supply is “being felt across the region with active listings at rock-bottom levels on the Island, Laval, and both North and South Shores,” RBC said. “Sellers hold a very strong bargaining position everywhere in the region.”
“Buyers, though, have bid up prices more aggressively in the suburbs – the North and South Shores in particular – where median prices have risen the fastest in January (up between 18% and 35% y/y),” RBC added. “With suburban prices still running at 16% to 30% discounts to Island prices, we expect these dynamics to continue in the near term.”
Calgary’s record-high activity last month will impart substantial market momentum for much of the year, RBC said. The region saw a 23% monthly and 66.4% annual increase in sales in January, accompanying an 11.7% year over year gain in the benchmark price.
“Demand-supply conditions got significantly tighter overall last month, adding steam to prices,” RBC said. “We expect even steeper increases in the near term. The stronger prospects for the provincial economy – led by a rebounding energy sector – have significantly boosted confidence in the housing market over the past year.”
