Is coronavirus about to prompt a house price crash?

by Steve Randall on 17 Mar 2020

The impact of the COVID-19 coronavirus outbreak is being felt across the world, but what will it do to Canada’s housing market?"

The short answer, of course, is that no one really knows, but the latest assessment of the housing market by RBC Economics suggests that things are about to get rocky.

Senior economist Robert Hogue said that the “light was on” in the housing market in February but that it is “about to be turned off.”

“The world has changed in March,” he wrote in the RBC Monthly Housing Market Update. “And so has the outlook for the Canadian housing market.”

Hogue said that fears of the spread and social distancing are set to decimate house viewings and buyers are likely to take a wait-and-see approach.

Then there’s the impact that Canadians’ investments have suffered from falling asset values. Hogue notes that some homebuyers would be relying on these investments to fund their down payment.

Despite mortgage rates remaining low, especially following recent interest rate cuts and the potential for more, consumer confidence is likely to outrank them.

Sales plunge but what about prices?
Hogue’s outlook is that home sales will plunge in the coming weeks before a rebound at some (undeterminable) point.

But he expects home values nationally to be resilient with tight supply in many markets providing a cushion against correction.

For Toronto, Vancouver, Ottawa, and Montreal, recent price escalations are predicted to cool but there could be tougher conditions for the Prairies where market conditions are softer and the oil price fall will be a further blow.

Post a Comment



Most Trending News

Toronto property taxes explained
News

No matter where you are, there are going to be some recurring costs associated with your investment. Here, we'll explain how property taxes work in Toronto.

Read More
Assessing average condo size: Toronto paying more for less
News

Data from Statistics Canada and Royal LePage indicate that in recent years, the square footage of Toronto condos has been shrinking at an arming rate.

Read More
Mortgage rates back up as GOC bond yields rise
News

Global bond yield rates are up this month, and Canada is not missing out on the action. Yield rates surged to 1.24% from the 0.85% of late September.

Read More