Canada Home Prices Are Projected To Drop In Early 2023, Especially In 5 Provinces
But will it last?
The average home price in Canada could reach its lowest point in two years, according to a forecast by TD economist Rishi Sondhi published by the bank on January 10. The expert is predicting a decline of about 20% compared to the price peak in 2022.
According to the forecast, the national average home price could "bottom out" at around $600,000, down from an estimated $750,000-$800,000 high in 2022.
Royal LePage, for its part, has predicted a similar national aggregate price (a weighted average of median prices, so a different metric than the one used by TD) decline in the first quarter of 2023, to around $750,000 from around $770,000 in Q4 2022 and around 12% compared to Q1 2022.
As of December 2022, according to TD, the projected 2023 average price change in Quebec was -7.4%, following 8.6% growth in 2022.
Average price declines could be most significant in Prince Edward Island (with a forecasted 10.7% decrease), New Brunswick (-11.3%), Nova Scotia (-12.2%), Ontario (-11.4%) and British Columbia (-9.7%), Sondhi writes. In Ontario and British Columbia, price declines are projected to "more than retrace the gains made in 2022," which were 4.5% and 5.4%, respectively.
Home sales are forecast to reach a low, too, due to what Sondhi calls "the poorest affordability backdrop since the late '80s/early ‘90s."
In Quebec, according to the same forecast dated December 2022, sales are predicted to drop 15.6% in 2023 after an estimated 20% drop in 2022.
Sondhi writes that sales and the Canadian economy more broadly should start to recover by 2024, driven in part by population growth and likely lower interest rates.
That could mean a price rebound. Despite the Q1 2023 drop, Royal LePage predicts the aggregate national price of a home in Q4 2023 will be just 1% lower than that in Q4 2022.