TORONTO — High interest rates will continue to hold back homebuyers into the new year, except in Ontario and British Columbia, a new report by RBC says.
The report released Thursday said those purchasing real estate in Ontario and B.C. in 2023 will hold a stronger hand as conditions in these provinces continue to favour buyers as opposed to sellers.
In the report, Robert Hogue, assistant chief economist for RBC, said nationwide real estate conditions look reasonably stable with sales-to-new listings in “balanced territory.”
“The number of homes changing hands is running below pre-pandemic levels in most regions of the country,” Hogue said.
He noted that this is especially the case across many markets in Ontario and B.C., which are beginning to operate outside of the balanced territory.
Sales in Vancouver, Victoria, the Fraser Valley, Toronto, Ottawa, Hamilton, London and Niagara are now seeing a ratio of sales to listings close to 0.40, which Hogue calls the threshold where buyers have more “sway on prices.”
Property values also fell in Toronto and Vancouver, as Hogue said the trend towards reversing some of the outsized price gains will likely continue in the short term.
Sales in many of these markets have slumped to their lowest levels in a decade, aside from during the pandemic, Hogue said.
He said that the price correction is largely a result of overshooting earlier in the pandemic, where local buyers were met with a sharp decline in affordable property.
Other markets in Quebec and Atlantic Canada are also currently operating at historically low levels.
On the other hand, the report said housing markets in the Prairies remain fairly robust with resales in Calgary, Edmonton, Saskatoon and Regina remaining well above pre-pandemic levels.
Home sales and prices have fallen this year as rising interest rates have increased the cost of borrowing for Canadians.
The country’s big banks have raised their interest rates as the Bank of Canada has raised its key interest rate seven times since March in an effort to bring inflation under control.
This report by The Canadian Press was first published Dec. 16, 2022.
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