The Canadian housing market has rebounded strongly, with a surge in sales and prices indicating a shift towards a seller's market. This can be attributed to several factors, including population growth fuelled by immigrants and non-permanent residents, a robust job market, and accumulated savings from the pandemic. However, the recent interest rate hikes and persistent inflation may deter some potential homebuyers due to increased borrowing costs.
A key concern is the limited availability of housing supply, especially in the "missing middle" segment comprising townhomes, duplexes, and low- to medium-rise apartments. While home construction has remained strong despite rising interest rates, the majority of new developments are condos, exacerbating the shortage of affordable housing options. Government policies have yet to provide meaningful relief in terms of increasing housing supply.
Despite these challenges, Desjardins predicts that the Canadian housing market will continue to experience gains, although affordability may further erode. The strong demand driven by population growth, a tight labor market, and accumulated savings is expected to support market activity. However, the impact of higher interest rates and limited housing supply is likely to temper further increases in prices.
Read The Residential Real Estate Outlook from Desjardins Here
