Bank of Canada hold on interest rates could help stimulate a return to buying in the real estate market.
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What’s more, the end to the correction depends in large part on whether the Bank of Canada has finished raising interest rates for the moment.
The central bank’s recent spate of rate increases, which started last March, have cooled real estate markets across Canada, leading to significant price declines in major markets. Higher mortgage borrowing costs only served to exacerbate existing affordability challenges in Ontario and British Columbia where average home prices were significantly higher than elsewhere in Canada.
While conditions could remain soft for some time, RBC noted that Canada’s real estate overall is bolstered by strong fundamentals positioning it for long-term growth. These include strong population growth paired with ongoing low supply for housing in many communities.
RBC further added new home construction has so far failed to keep pace with demand with about 220,000 completions in 2022. It said builders would need a pace of at least 270,000 units completed on an annual basis by 2025 to keep up with expected demand growth.
