But those won't be the only major markets where prices will soften
National Bank of Canada is predicting the largest ever price decrease in Canadian real estate this year, at an average of 9.8% from 2020 to 2021.
This will outstrip the historic 9.2% decline during 1981, as well as the 6.3% drop that the Canadian property market saw during the previous global recession, data analysis hub Better Dwelling reported.
The impact of this market weakness will be most apparent in Toronto and Vancouver, with predicted 2020-21 decreases of 13% and 12%, respectively.
Montreal, which saw its unemployment levels spike by 51.67% annually to reach 9.1% as of the end of March, is also projected to see a 7% drop in real estate prices.
NBC also forecasted that low interest rates stemming from the Bank of Canada’s multiple rate cuts will not deter these declines.
“During past recessions, lowering interest rates helped to stabilize real estate markets. This is expected to have a smaller impact this time, since rates were already very low to begin with,” Better Dwelling said. “When home prices are at record highs, and mortgage rates at record lows – lenders now face a high risk and low reward prospect.”
This mirrored recent statements by Moody’s economist Abhilasha Singh, projecting home prices to fall by around 10% this year.
“The COVID-19 pandemic along with the collapse in oil prices will create a perfect storm this year for both home sales and residential construction,” Singh said last month. “Not even lower interest rates will be enough to save the housing market.”
