secure mortgage pre-approvals and purchase homes, fuelling a boom in the housing market, increasing prices by 18.2 per cent in October, from a year earlier.
Nevertheless, experts are of the view that the ongoing house price inflation will lose steam next year, although they largely convinced that affordability will worsen in the red-hot property market. In a poll conducted by Reuters in August, market analysts claimed that house prices in Canada are expected to rise by 16 per cent this year. While this figure has now risen to 18.6 per cent, they project these increases to significantly slow down to 0.5 per cent next year and 2 per cent the following year.
Of the 14 market analysts who participated in the survey, nine said interest rate hikes or tighter monetary policy would have the biggest impact on house prices in Canada next year, while the other cited supply constraints. Many first-time home buyers in the country have already prices to escalated beyond their reach and increases in interest rates by the Bank of Canada by the end of the third quarter next year, is only expected to aggravate their woes, although some experts may not fully agree.
“One or two rate increases is unlikely to have a meaningful impact, but if we see four or more rate increases in 2022, this should take some demand out of the market, especially from interest rate-sensitive investors,” John Pasalis, president of brokerage and research firm Realosophy Realty, said.
