House prices in Canada have been sweeping upward with inflation for at least a year, but a downturn is finally in the cards.

RE/MAX Canada is predicting more than half of urban housing markets across the country to balance in 2023 with average residential prices decreasing by a little over 3%. Some cities are forecasted to see average residential sale prices drop as much as 15%.

Quebec is projected to fall toward the tail end of positive housing trends, but some property types will benefit.

A new RE/MAX report forecasts the highest national real estate price drops in Ontario and Western Canada. Cities like Barrie (-15%), Durham (-10%), and even the GTA (-11%) are slated to see a notable home price decrease. Those cities in B.C. such as Nanaimo and Kelowna are slated to go down by 10%.

By comparison, the average residential sale price around Montreal could fall by 5% with rising interest rates expected to slow home price declines.

"We’ll see three main trends this year [...] slower movement in the market, an increase in the amount of move-up buyers and the market continuing to balance out in 2023," said Patricia Hamelin of RE/MAX du Cartier.

Right now, the greater Montreal area is a seller’s market, but some types of properties will move toward a balanced market in the coming months.

Single-detached homes are proving the highest in-demand housing type in the region. In contrast, the market for luxury homes will keep cooling, which could be a boon for potential buyers.

Pandemic-related supply chain issues, labour shortages and rising material costs complicate matters and delay new construction developments.

Over the past year, the average residential sale price in Montreal increased by 13% year-over-year from $490,000 in 2021 to $556,000 in 2022.

That means the potential 5% drop in 2023 drop won't be huge but could signal a positive future trend for buyers.